Photography: Mohd Nasir
Avtec Ltd, among the several brilliant
companies of the CK Birla Group, has got several formulas ready for engineering
a massive growth in the near future. But the common ingredient that will make
all these formulas fool proof and successful is evidently very simple—“Make in
India”. Having become an expert on the heavy engineering front by producing
powertrain aggregates, the company has put together a handful of strategies to
emerge as a major force to reckon with in not just powertrain aggregates but
also high-precision engine and transmission components for the automotive and
off-highway Industry, besides the Indian Railways. All this with the aim of
becoming a Rs 3000 crore company in the next few years.
“The company’s growth has been
a bit slower in the last two years as compared to the earlier years. But now we
are poised for a greater growth. In the year 2012 when we came out with a
strategy we were treating Avtec as one company. We came out with an SBU
(Strategic Business Unit) structure that had Automotive, Off Highway, Components
and our overseas division of Assag. We now have four different SBUs. That
really helped us to focus on growth and especially the products we decided to
get into,” says Prabhakar Kadapa, CEO of Avtec
Ltd in an exclusive interview with Motown India.
Avtec currently undertakes
proprietary and contract manufacturing of petrol and diesel engines and
transmissions for passenger cars, SUVs and light and medium commercial
vehicles. Flexible manufacturing capabilities allow a mix of process- and
product-based layouts, for both batch and high volume production. The company’s
automotive offerings are also backed by R&D capabilities in India and
Avtec expanded its global
footprint by acquiring Assag, a Switzerland-based company that is into face
gear technology. Assag is the world leader in crown gear technology and a
leading enterprise for drive systems. Assag , with headquarter in Dudingen,
Switzerland, has a big engineering team for R&D of face gears. It also
encompasses assembly line for gears with varying diameter, prototype building,
testing and validation. The Switzerland based company has a sophisticated face
gear manufacturing unit in the Netherlands. With modern machinery and
comprehensive measurement systems, the Netherlands unit is capable to provide
high quality gears with shorten delivery time.
Meanwhile, back in India,
Avtec’s manufacturing units in Pithampur near Indore and Hosur in Tamil Nadu,
are engaged in the proprietary products and contract manufacturing of engines
and transmission aggregates for some of the renowned global OEMs’ such as Ford,
GM, Renault-Nissan and Daimler, to name
a few. The company had set up a
capacity of putting together 200,000 units of transaxles per annum initially in
Hosur for Ford India. But when Ford India went on an expansion drive into
Gujarat, Avtec too set up an adjoining facility for another 250,000 units per
annum. Put together, Avtec is capable of assembling 450,000 transaxles and each
transaxle is completely tested as per international standards.
“The USP of the Switzerland based company is that it has got a lot
of Intellectual Properties. There is a technology called face gear. We are the
global patent holder for this particular gear profiling or gear designing.
Hitherto they were only producing customised gear box, using only the
technology. The proliferation of this technology is a little slow because the
way we were manufacturing, cost competitiveness was little difficult, given
their cost structure. So what we decided as part of our strategy is that we are
having a big plan to do the manufacturing in India to offer a cost effective
solution to the design of Switzerland so that the combined revenue between
Avtec and Assag would go up multi-fold. That is one strategy,” says Kadapa.
Kadapa notes that the second strategy is that “they are very
competent in creating gear boxes for varieties of applications. That is another
area we are working very closely. Third
is that supporting Avtec here, a couple of design programmes are given to them
so that they design and give it to us and Avtec will do the piloting,
validation and testing for the customers. All this will help us to harness
their intelligence competency in the design field. All these three put together
will support the Avtec growth plan of Rs 3000 crore before 2019-20. We want to
grow to a Rs 3000 crore company”.
Kadapa stresses that Assag has a larger role to play in product
development. For its various clients Assag will give design solutions and Avtec
will do the manufacturing. “As for the customers of Assag, the latter will do
the design and we shall manufacture for them. In other words, there will be a
seamless integration of the parent company and the acquired company,” he adds.
The Hosur plant of Avtec manufactures
both automatic and power-shift hauling transmission for domestic and global
off-highway enterprises. It follows a cellular manufacturing approach, which
supports a broad product mix and a faster response. Another plant, located in
the Madras Export Processing Zone (MEPZ), Chennai is a completely export
oriented unit caters to the global demands.
capabilities of Avtec
Avtec’s manufacturing units in
Pithampur, Hosur and Chennai are equipped with some of the best of
international machines like Liebherr, Gleasen, Hyundai, Mori Sekie, Reishauer
and Escofier. Globally it had acquired Assag of Switzerland. According to the
company, ‘Cylkro’ Gear Production B.V (CGP), in Hengelo, the Netherlands, is a
100pc subsidiary of Assag equipped with sophisticated manufacturing facility
for face gears. With modern machinery and comprehensive measurement system, CGP
can provide high quality face gears with shorter delivery time.
Avtec has also formed a joint
venture with Russian local engine manufacturer ZVD under the name AZ
Powertrain. The company is setting up a plant in the Togliatti region for the
manufacture of engine and transmission for a Sports utility vehicle in Russia.
Production is expected to begin by the end of 2015.
Avtec has now decided to focus
a lot on components. The range of components manufactured by Avtec includes:
- 5 'C's of Engine: Cylinder
head, Cylinder blocks, Crank shaft, Connecting rod and Camshaft
- Complex Casting Parts:
Exhaust & Inlet manifold Flywheel, Rocker cover
- Transmission components for
Automotive & Off-highway
- High precision Gears &
- Transfer case
- Planetary gear drive
- Double synchro pack
“Where aggregates are
concerned, I am seeing more of a domestic market demand. But then I also see that my customer is exporting
his products. In the global market, for aggregates, the companies would prefer
that their customer is near them in terms of location. We are seeing a lot of
potential for exports in the speciality components segment. We are very
competitive when it comes to high technology, high complexity component systems
and sub systems. The RFQs (Requests for Quotation) I have received for these
type of components are enormous and I am forced to say that this is a high
growth area. Today 12 to 15pc of revenues come from exports which largely
comprises of components. In the next three to four years, it would go up to at
least 25 to 30pc and this would primarily be components and sub-systems,”
The components manufactured by
Avtec are not limited to only off
highway and on highway segments. The company has had an opportunity to work
with the Indian Railways which was till recently importing parts from the US;
Now Avtec is able to give them an import substitution solution. “Year on year
we are getting more orders from them and newer parts are getting added,” Kadapa
says gleefully. .
Kadapa is clear of the
strategy for the next three years for his company.
“We want to grow organically. Inorganic growth could happen after three years.
Today the Make in India programme is coming very strongly. It is going to
provide a lot of manufacturing in India for hi tech components,” he concludes.
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