Buoyed by hopes of an infrastructure and GDP expansion and specific opportunities in the field of electronics in particular, the UNO MINDA Group is aiming to achieve revenues of Rs 10,000 cr by 2018-19. We recently caught up with Nirmal K Minda, Chairman, UNO MINDA to understand what product lines and policies will drive this growth of about 150 % over the next three-odd years.
BOLSTERING IN-HOUSE TECHNOLOGY
Having expanded into over 20 product lines across multiple vehicle areas, the company now aims to better utilise the existing capacities and capabilities instead of scouting for newer product areas. Key areas of growth, as Minda outlined, fall in the electronics category. Switches, lighting and horns in particular are expected to generate positive results over the next few years, both in the domestic as well as export markets.
The most important step for the company now is to improve its technology as well as quality, Minda noted. With many of UNO MINDA’s customers now exporting vehicles, it has become paramount for the suppliers to meet more stringent quality norms as these vehicles are subject to stricter recall policies. In order to foster a culture of innovation hereon, the company is trying to establish specific R&D set-ups for al key product areas. This will allow each product division to come up with effective solutions specific to consumer and geographic needs, Minda added.
Naturally, this plan, along with that of improving quality, needs investment. The company spends a little over two per cent of its annual turnover in R&D presently but in the case of some product lines, it’s already as high as three per cent, Minda informed. By Indian supplier standards, this is on the higher side and the company wants to continue improving it in the right areas over the next few years. Giving this claim a numeric sense, Minda mentioned a total investment in the region of Rs 1,500 cr over the next few years, including domestic and international operations.
Responding to the progress and potential of the company’s lead-acid battery business, Minda said the company will continue to focus on selling two-wheeler batteries in the aftermarket for another two to three years, before making a move into the OE space. The job on hand right now for them is to start manufacturing batteries at the joint-venture plant they’ve set up with Panasonic Corporation. The Japanese company is right now bringing four-wheeler batteries from Thailand and their local production is expected to begin by the end of this year, with Maruti Suzuki as the customer. With the company set to leverage technical know-how in batteries from Panasonic, Minda holds positive expectations for the battery business.
Talking about the company’s focus on electronics for growth, Minda talked about the company’s recent foray into the connected car space through telematics. Although at a nascent stage, Minda iConnect aims to enhance the value-offering to OEM as well as end consumers by offering end-to-end connectivity solutions. This would involve solutions ranging from hardware to cloud-based applications for mobile and web platforms. In order to kick-start things, the company will first offer a plug-n-play OBD dongle based solution, allowing OEMs to test the functionality of telematics. As the technology gains importance on the back of increasing demand, the company plans to move to embedded solutions, enhancing the scope of the technology.
The UNO MINDA group has witnessed a dip in some of its financial figures in the recent past, but Minda believes that things should only improve from here. With gestation periods for most product lines nearing completion and in-development technology reaching production, EBITDA should be in double digits in a year or two, he added.
While financial analysis isn’t our domain, the company is doing two critical things right presently in the technical context. First, it’s increasing spend and process focus on technology & quality improvement for existing products before adding more to its line-up. Second, the company is investing in right areas within the blanket of electronics. Investing in areas such as switches, lights and horns along with a scalable focus on connectivity solutions bodes well for business prospects in India and other regions.
Text: Arpit Mahendra