Company
Description: Fiat
Partecipazioni India Pvt Ltd was set up in August 2009. Almost all the sourcing
activities Fiat was doing till then under Iveco was transferred to this
company. Earlier the Fiat sourcing company was only dealing in parts for Iveco
and Fiat Power Train. After this new company was formed it started doing
sourcing business for Fiat cars also. Fiat Partecipazioni is a full-fledged sourcing
company for Fiat cars, trucks and engines. Niraj Hans is Managing Director at Fiat Partecipazioni
India Pvt Ltd. A mechanical engineer and MBA by qualification, Hans started his
career in automobile sector with sourcing of automotive components and handled
the assignment at various capacities for various Indian & MNC automotive
players in purchasing and global sourcing function.
How was sourcing done before Fiat Partecipazioni
was formed?
Under
Iveco we used to source components for Iveco as well as Fiat Powertrain. In
January 2008 the Fiat group decided to integrate all purchasing activities in
Italy. As a result we too were asked to combine all our purchasing activities.
Because it was an Iveco branch office we did not want to be seen as an Iveco entity working for the whole
group. So we decided to float a new company so that we could demonstrate it
from the group perspective. The entire Fiat group purchasing also comes under
the holding company. You call it a legal umbrella. So in India we are doing
purchasing as well as business development as far as engineering outsourcing
activities are concerned.
When was Fiat Partecipazioni India set up?
The
company was set up in August 2009. Almost all the sourcing activities we were
doing under Iveco we have transferred it to this company. Earlier it was only
Iveco and Fiat Power Train. After this company was formed we started doing
sourcing business for our cars also. So now we are full fledged in cars, trucks
and engines. As for tractors, the strategic part is done from here while and
execution part is done by Case New Holland.
So what does sourcing entail for your company?
This
office deals with exports of components from India. We have local colleagues
managing the local sourcing from vendors. Our team comprises those from
purchasing, supplier quality, supply chain, engineering support etc. The
support also comes from expats from Italy based here. We have separate teams
for global spare parts sourcing for cars, engines and tractors. We are a small
team but we support the Indian suppliers in supplying components to Fiat
worldwide. That includes Europe, Latin America, and North America etc. We also
do sourcing for non-production vehicles. Internationally there are a lot of
vehicles that are no more in production but they are still being used by
customers. We call them non-production vehicles. That business alone is worth 5
million Euros (Rs 29 crore approx.) per annum.
What is the total value of components that are
being sourced out of India?
This year we shall touch around 110 million Euros (Rs 649
crore approx.) We have around 80 suppliers in India supporting this activity
for us. Almost 750 part numbers or varieties of parts are going from India to
various destinations. We are relying on our experience of the Indian market and
we have a basic supplier selection process before we get into business with any
company. They are not dedicated suppliers but suppliers selected by us.
Are there any common automotive parts that are
sourced out of India?
India
is very strong on mechanical parts. In mechanical too you have various
categories like machining parts, forging and machining, casting and machining,
sheet metal products, wheels, aluminium die casting components, engine
components, pistons, crankshafts etc. These parts constitute the majority of
the parts exported out of India. Since last year we have started with chemical
parts like plastics, rubber parts, glasses, electrical products etc. We have
started the process in these areas and we expect the results from next year
onwards. A majority of our parts is going to Italy. We started with Italy,
Spain and Germany and since last year we have been supplying to Latin American
countries like Brazil and Argentina also.
When we take parts from India we see the business
case. The business case is based on how much investment we need to put in and
what is the return we are expected to get. Our first focus is on the mass
produced parts.
Is Fiat Partecipazioni India working as in
independent company or does it have to take into consideration Fiat’s existing
businesses in India?
On the operations front we are an independent company.
Having said that, our synergies exist with other Fiat companies. We keep on
discussing our strategies with regards to a particular supplier. So there can
be a common strategy wherein the parts supplied to our plants in Ranjangaon in
Pune for cars and engines are also exported. The team here is only responsible
for exports.
What makes India a good sourcing base for Fiat?
We
started this activity in 2003-04 but today the market is developed and is
strong. The Indian supplier base is now an international supplier base. In
short they are Indian multinationals. We are trying to tap them as far as their
technology is concerned and their capacities are concerned. India has a
definite advantage but I must say that cost advantage is going down slowly. But
we need to see beyond that. There are so many technologies that would be
transferred to India and China in the coming years. On the quality front there
were a few teething problems but once we got into it these problems were
settled to a great extent. We started this business as part of re-sourcing.
There was already a plant in Europe but we wanted an alternate supplier in
India. But since 2010 we have been giving Indian suppliers business awards for
advance purchasing projects involving them with Fiat projects that would be
started beginning 2012. Hence Indian suppliers are part of this co-engineering
and co-development. That is the kind of confidence Fiat has on its vendor base
in India.
From the purchasing perspective how exciting is
the Chrysler business since it is now Fiat owned?
We
have colleagues sitting in Chennai doing the purchasing for Chrysler and we
have full synergies with them as far as supplier data base is concerned. We
have so much of experience dealing with suppliers for Fiat. Chrysler too is
getting into that. So we definitely share as soft synergy. The Chrysler
business to is picking up and is doing well. With Fiat platforms being launched
in the US in the coming years, Chrysler will be also tapping the supplier base
which we have been dealing with.
How has growth in sourcing business been the
last few years?
We started with around 50 million Euros worth of
sourcing in 2007-07 and then we touched 70 million Euros and are now poised for
150 million Euros 110 million for this year. Cumulatively we have done business
worth Euros 370 million or so and in the years to come it will definitely be
increasing.
Did you have to cross several hurdles to reach
this stage?
Traditionally
the Indian supplier base was developed to supply the Indian OEMs only. That was
the way the technology and the facility were put in place by the vendors. But
the same suppliers have over the years invested in their plants and raised the
bar in the production both in terms of quality and capacities.
Would you like to throw some light on the supply
chain aspect of this business?
When
we merged our offices in India we were getting a lot of support from the
different supply chain providers. So when we merged we had around 13 to 14
supply chain providers. Keeping our overall business in mind we short listed
five supply chain providers and finally chose one from this who is now
supplying all the suppliers from India. They have different warehouses all over
the country where all the parts go. My supply chain team is able to track the
product. It is a huge logistic exercise to ensure that the parts produced in
different plants across are finally supplied to OEM plants located in the
different parts of the world.
What is the road ahead for your company?
We
have very clear cut business plans. We are going to source many products from
India. Advance purchasing is precisely in that direction. The suppliers will be
catering to not only the vehicles that are being made today, but those that
would be made in the future. Many commodity senior officials from Fiat would be
visiting India in the coming time and we are going to increase the business
here. Our 2011 target is to include more suppliers for chassis, interiors and
plastic components in a big way. We are also exploring sourcing of tools and
dies and thereby get into engineering capabilities.