UNO MINDA | Making Best Use Of The Downturn

UNO MINDA | Making Best Use Of The Downturn

As the component suppliers of India sat down to discuss various challenges and opportunities at the ACMA annual convention, we caught up with Sudhir Jain, Group Finance Head, UNO MINDA Group (L), and Sanjay Walia, Vice President, Corporate Marketing, UNO MINDA (R) on the sidelines of the event to understand the group’s present financial performance and future plans.

MANAGING CHALLENGES

The overall revenue numbers have been affected by the on-going economic turbulence, but the group’s presence across all vehicle segments has helped it lower the negative effects, said Jain. Although the three-wheeler and off-road business has increased beyond the company’s expectations, the overall volumes aren’t enough to offset the decline in other high-volume segments.

The Pune-based units of the Uno Minda group are facing the pinch harder compared to companies in other parts of the country. This is primarily due to the fact that these facilities are largely dependent on Tata Motors, and the major sales decline at the OEM has had a ripple effect on the production. The extent has been such that the Pune plant is operating at just about 60 % of its installed or available capacity. Production in plants in the northern regions, at Manesar for instance, is down five to 10 %, which is in sync with the overall market performance.

The counter action from a financial perspective has been to better manage cost and improve production efficiency, said Jain. A key initiative, which is helping the company in these times, is the implementation of SAP across the company. This is helping the company analyse process cycle times and compare the production output against it. Such data availability and processing ability is a key asset in present times, since a company can potentially lower its costs using such data.

In addition, the company is laying increased focus on working capital management, as in tough times it becomes imperative to realise any extra cash using excess inventory or debtor money. Capacity utilisation is another area being looked into by the company. The company is considering the idea of utilising existing capacity to manufacture some of the parts that are outsourced presently. This can be achieved by installing the required machinery, thereby resulting in using more of the unutilised capacity.

Sanjay Walia-UNO MINDA

 

NEW PRODUCTS

In addition to managing available resources better, Walia said the company is presently on an aggressive mode for entering new product segments and has been making significant investments towards the same. These include a JV for blow-moulding components, a JV for audio business with Fujitsu, JV for air-brakes and the acquisition of Clarton in the horn space. More importantly, the response from customers has been positive for these new product lines, said Jain.

Jain believes that the timing of these decisions was good for the group, owing to which the company is busy setting up new plants and expansion, despite a slowdown. He added that while there are short-term issues for the business, long-term prospects are positive. The company is fully committed to investments announced and all of them are on track in view of future growth prospects.

A segment where Walia expects the company to be a game changer is CNG kits, which it presently supplies to Maruti Suzuki. The company is presently planning to localise these kits, the implementation of which should take about a year from now. An added advantage is the design capabilities of the company, owing to which it has been able to develop the ECU for the three-wheeler CNG kit along with some heavy industrial applications.

Text: Arpit Mahendra