I N D I A ’ S N O . 1 M A G A Z I N E F O R A U T O M O T I V E N E W S , V I E W S & A N A LY S I S
Auto Monitor
Vol. 13 No. 30
www.a mo nl i ne.i n
19 August 2013
NEWS
Pg 10
24 Pages
ANALYSIS
`50
Pg 11
Two of a kind
Strikes and Strife
Visitors to Auto Expo 2014 will have a tough time commuting between two locations 50 km apart.
An indepth analysis of why auto cos are beleaguered by strikes at their factories.
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Varroc to set up plant in Chennai The plant set up over 5.5 acres will have a capacity to manufacture 2.2 million parts annually. Slated to begin production of polymer components by mid 2014. Anand Mohan
T
he Va r roc g roup will set up a plant in Chennai next year to manufacture polymer components for the two-wheeler industry. The company is setting up the facility to supply to Yamaha to begin with. Located in Sriperumbudur, the manufacturing unit will be set up over a 5.5 acre plot with a capacity to manufacture 2.2 million parts annually. It is slated to begin production by mid 2014 when polymer components like mirror assemblies and seat assemblies for Yamaha will be manufactured. The company will expand its product portfolio as business scales up. Varroc is going through a high growth phase since the acquisition of Visteon last year and by challenging itself with ambitious plans to become Rs 20,000 crore company by 2020. In order to realize this vision and to ensure smooth integration of its M&As, the company has appointed Amit Dakshini as a Chief Strategy Officer of the company. Amit, as his profile states, has ‘over 17 years of experience in strategy planning, mergers and acquisition, joint venture, business development, business planning, management consulting and financial modeling.’ The Varroc group has over a couple of dozen plants in the country. Amit says, “Following
an OEM has become a norm in the industry. When an OEM sets up a new plant, component manufacturers follow them because proximity makes JIT easier.” Just In Time manufacturing works better with shorter delivery times, especially for large body parts like polymer components. That is why it is the first business Varroc is setting up among its many businesses. Amit adds, “Another Varroc project will come up soon in the western region but we will provide more information on that later.” Our guess is either in Neemrana or Sanand. We’ll let you know soon. Amit joined Varroc a few months ago, yet in addition to talking to the press about the company’s developments, he already dabbles between many roles. He says, “My role is to assist in developing strategy for the next seven years to achieve our MD Tarang Jain’s vision to be a Rs 20,000 crore company by 2020. In addition, I will oversee implementation of strategy across the businesses, identify and execute inorganic growth opportunities and also assist in the integration of M&As executed by the Group.” He will also oversee corporate marketing.
Visteon Integration Varroc acquired Visteon last year before the arrival for Amit. The size of the acquisition and the quantum of work required in integrating what is now Varroc Lighting Systems
Varroc’s acquisition of Visteon will help them position as a 4-wheelers lighting major. By 2020, it wants a significant portion of business to come from the lighting business. with the rest of the Varroc group is yet to be completed. It is one of the first assignments for Amit. He says, “Varroc Lighting Systems is almost equal in size of Varroc so integration there is not just a two-three months activity. It will take time and we have consciously decided to avoid rushing into the integration. Of course there are a lot of synergies on the customer and on the technology side that we plan to leverage into India and other key geographies. This was also one of the key strategic rationale for Varroc in acquiring Visteon.” He adds, “Its also important to note that even without any major integration till now, VLS is performing reasonably well.” The acquisition of Visteon helps Varroc position itself as a 4-wheelers lighting major. By 2020, the company wants a significant portion of its business to come from the lighting business.
Amit Dakshini, Chief Strategy Officer, Varroc.
Challenging market conditions The industry is going through a tough phase and almost every manufacturer is approaching the situation with solutions of its own. Varroc says this is not a slowdown. Amit comments, “What we are seeing is a correction. We are not waiting for things to bounce back. We are preparing to work in this kind of environment. Any slowdown helps you bring about internal corrections in terms of talent, management bandwidth, looking at processes and improving efficiencies.”
New frontiers
Parts like seat assemblies will be manufactured for Yamaha. Varroc plans to add more products when the business demands.
India is beginning to emerge as a 4-wheeler export hub but much before, it has established itself as a 2-wheeler exporter. Almost every 2-wheeler OEM is exporting to more than a handful
of countries. For a parts supplier though, supplying to OEMs for export models doesn’t reflect as exports for them. Large component manufacturers are looking at production in other markets to increase global footprint. Varroc is a good example of that. Amit says, “If you look at the ASEAN region for two wheelers, you will notice that it is almost the same size as the Indian market, which is about 12-13 million. Indonesia is about 8.5 million so Indonesia is a market we cannot ignore.” He adds, “While we are looking at 4-wheelers, the 2-wheeler space will be a strategic market for us even seven years later. China is number one, India is second and Indonesia is third, so for any Indian components major, After India, Indonesia and the Southeast Asian region is the next strategic market to focus on.”