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We plan to develop new products for commercial vehicles



…says Jinendra Hirachand Munot, Chairman of Varsha Forgings Ltd (VFL) and KCTR Varsha Automotive Pvt Ltd – a JV between VFL and Korea’s T&G Corporation. Today, VFL, acquired by Munot family in 2007, has emerged as a dependable source for machined forgings for intricate and profile components. In this interview with Rakesh Rao, Munot – a technocrat having 30 years of experience in automotive domain – shares his vision for the company and emerging trends in the industry. 
 
It’s been a decade since you acquired Varsha Forgings Ltd (VFL). How has been the journey so far?  
It has been a very fruitful journey involving learning the tricks of the forging trade – from the earlier experience of buying forgings to now selling forgings. This trade is very cost conscious as there are many forging units who sells to big OEMs, having large negotiating power. This entails stiff competition among forging manufacturers.
 
VFL formed a JV - KCTR Varsha Automotive - with T&G Corporation in 2013. What was the rationale behind this move? How has this JV benefited the company?  
The JV with T&G Corporation was to bring in Indian market a long lasting, more durable, safe and reliable product design of sealed ball joints to meet growing demand of Indian auto manufacturer, specially the commercial vehicles (heavy trucks and buses). This endeavor is well appreciated by all Indian OEMs.
 
Over these years, how has the technology of forging, one of the key metal forming processes, evolved to meet the changing needs of the customers?  
Metal forming, which is a labour intensive process, is now upgrading to more automation in manufacturing, design, to make near net-shape forgings for customers, who are willing to pay somewhat more and save on machining cost and extra input material cost.
We have responded to customer expectation with equal aplomb by providing machined part/assembly and investing in infrastructure to have win-win business solution.
 
You have been associated with automotive industry for over 30 years. What makes the Indian auto component industry globally competitive? What are its strengths and weaknesses?  
Indian automotive industry is flourishing its wings worldwide. Globalisation provides a great opportunity to Indian auto component manufacturers due to their skilled manpower, cost competitiveness in terms of raw material, established manufacturing base, high operational efficiency, innovation, IT capability in design, development, simulation, high quality, and productivity initiatives (TQM, TPM etc).
Low investment in research and development (R&D), limited knowledge of product liability and offshore warranty handling, economics of scale, gap in the skill development, improper infrastructure for supply chain and slow pace in adoption to system integration are weak areas. Many global players like Daimler India, Hyundai, MAN Trucks and Suzuki are using their supplier base in India for exporting parts.
 
What is the significance of sealed ball joint technology for Indian OEMs? 
KVAPL brought ‘sealed ball joint technology’ for steering linkages and suspension parts. The conventional ball joints are serviceable type with grease nipple. These ball joints have less life due to faster wear and lesser durability and economics of operation. Sealed ball joint introduced by KCTR Varsha offers several advantages with high durability and maintenance free usage. The low friction between ball stud due to special rubber seat gives it high performance. The ball joint also has high static and dynamic load capabilities with a simple internal structure and fewer parts, making the joint lighter in weight. The high quality thermo polyurethane (TPU) dust cover gives the sealed ball joint longer life.
 
How is the market of commercial vehicles (CV) in India? Do you think demand for CV will pick up further in 2018? 
The domestic commercial vehicle industry growth has moderated from 11.5 per cent in FY 2016 to 5.5 per cent in FY 2017.
A confluence of factors including waning replacement demand, weak cargo availability from the industrial sectors and uncertainty related to effective taxation due to the enforcement of GST have contributed to the slowdown. The road logistics sector that depends on cash transactions was further hit after demonetisation and subsequently applied the brakes on the domestic CV sector. Pre-buying spree in fourth quarter of FY2017 due to BS IV emission norms, tapered down in Q1. At present, the overall demand is good in CV. 
 
National Green Tribunal’s (NGT) push for phasing out of old vehicles would trigger replacement led demand especially in tractor trailer segment. In addition, stricter implementation of CMVR regulations will push CV sales in 2018. Government’s Smart City initiative, resumption of mining activities in few states will continue to support demand for tippers. CV makers are now gaining momentum due to stabilising of GST procedures and this may result in healthy growth. The fourth quarter (Q4) of 2018 is expected to the highest production quarter.
 
Overall, the domestic CV industry will register a double-digit growth in FY 2018.
 
As a technocrat, what are the challenges of running a business in a highly competitive market such as auto component industry? What is your success mantra? 
High maintenance cost, low or no automation, increased conversion cost, inventory management, material handling, customer demand pattern, demand volatility, cyclical downturns, transportation, maintaining quality level and reliability of service are some of the key challenges before an entrepreneur.
 
In today’s global competitive business scenario, customer satisfaction at competitive prices, world class quality and on time delivery (JIT) can provide a clear lead to the organisation among the competitors. We have inculcated focused approaches towards total productive maintanace (TPM), value stream mapping (VSM) and time and motion study which can give phenomenal results in domains of machine performance, material flow and manpower productivity, respectively. This helps us in addressing 3Ms of operations. 
 
By implementing these set of tools, coupled with resource optimisation, a significant impact can be seen in potential of reducing working capital requirements and improve profitability. 
 
You aim to develop all chassis suspension parts and steering linkages for providing one-stop-solution to OEMs. How close are you from achieving this goal? 
Varsha Forgings Ltd is using forging expertise as forward integration. VFL is major supplier of steering parts to ZF Steering Gear Ltd like Pitman Arm, sector shaft, etc. To carry forward this strategy, VFL entered into JV with T&G Corporation, Korea, to make drag link, tie rod for Indian CV manufacturers. VFL also formed a Suspension Division to make torque rods and V links to Ashok Leyland, Daimler India, MAN Trucks, and Volvo Eicher. Thus, VFL has now developed an umbrella of steering linkages and suspension parts to cater commercial vehicle segment.
 
What are the emerging trends in steering gear technology? 
As I am also associated with steering gear business, I anticipate global automotive power steering gears market to grow at a CAGR of almost four per cent during the period 2017-2021 for CV and PV. The emerging trends are increased adoption of electric power assist steering (EPAS) in buses and cars which has advantages of ease of driving, bolster on-road safety and increase fuel economy. Steer by wire system, a recent innovation, eliminates most of mechanical parts and has multiple advantages of styling, design, space, lesser complexity, driver comfort and vehicle safety. Steering linkages with sealed ball joints are immensely popular technology globally.
 
Auto industry is set to embrace BS-VI norms by 2020. How is your company adopting to this change (shift from BS IV to BS VI)? What kind of opportunities are you looking at? 
We are not affetected by BS-VI norms. In fact, along with BS-VI change the OEMs are now bringing modular change in their product portfolio and will introduce next generation vehicles with new technology, styling, aesthetics and vehicle integration. KVAPL is partner for this change and proactively working with OEM as technology upgardation partner. We are also exploring opportunity to acquire technologies and capabilities through joint ventures, in house R&D to move up the value chain. Lesser weight of a sealed ball joint will enable OEMs to use more such product and meet weight target for BS VI. 
 
To make critical parts and components, auto industry still has to depend on overseas technology. Do you think there is a need to focus on developing IP in India in the auto industry? 
There is enough knowledge, technology and research in auto component manufacturing to meet OEMs specification. What we lack is testing facility for validation. ARAI and other similar institutes are doing yemons service to address this issue. However, all round efforts are needed to bring world class testing facility for Indian auto component manufacturers. IP laws or the intellectual property system plays a pivotal role in framing industrial, trade and financial policies for scientific and technological development of any country. IP laws must be supported with strong enforcement mechanism to derive its benefits. Spurious parts made by unorganised sector, with no validation and safety checks, are big threat in this direction. 
 
Government plans to allow sales of only electric vehicles by 2030. What impact will it have on the auto component industry in India? 
The government mission of electric vehicles to ply on India’s roads by 2030 is aimed at meeting the country’s climate change commitment and to reduce spending on oil imports. This move is expected to result in reduction of usage of IC engines. The auto component makers involved in making engine parts and drive transmission will get affected. Electric vehicles disruption will hurt the industry in the short term but most suppliers will eventually adjust to the changes. We must remember famous saying “To earn something, we have to lose some”. However, this is for betterment of environment in particular and society at large.
 
As a component supplier, how are you planning to tap EVs opportunity? 
For us being primarily in steering linkages and suspension parts no impact. The current use of drag link, tie rod, torque rod and V-link will be required for electric vehicles also. At the most packing configuration of these parts may change, which we will take care of by aligning with OEM design team. We are studying the EV components and its integrity of development to expand our product portfolio.
 
What are your long-term and short-term growth plans for your company? 
As a short-term company mission, we aim to align with major OEMs in India by extending benefits of unique sealed ball joint technology. This means acquiring more business by expanding customer base. Considering good growth of CV industry we are also keeping a tab on the volume to deliver and plan capacity augmentation. We, therefore, are focusing on setting up short goals and achieving them through methodological approach within budget, with prime focus on brand building.
 
As a long-term vision, the company wants to develop new products like control arm, stabiliser link, anti-roll bar, and torsion bar for commercial vehicles of existing and new customers.

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