The Hindu Business Line : Japan's Hino to source engine components from Ashok Leyland

Long-time partners
A number of Ashok Leyland's trucks are fitted with Hino engines — produced by Ashok Leyland under a technology licence from Hino

Chennai , Aug. 4

A team from Hino Motors, Japan, will be here in about a week to finalise a sourcing deal with Ashok Leyland. When the deal happens, it will mark the first step of Ashok Leyland's fledgling auto components group into the Japanese market.

Hino could be buying a number of auto components from Ashok Leyland, from engine blocks to smaller components such as water pumps, Mr S. Nagarajan, Executive Director, Ashok Leyland, told Business Line on Friday.

He said Hino was stopping production of some models of engines, but there was a demand for spares for those engines from South East Asia, West Asia and Africa. "It is a big market," Mr Nagarajan said, adding that he was confident of getting a big chunk of the business.

Hino and Ashok Leyland have been partners for a long time. A number of Ashok Leyland's trucks are fitted with Hino engines — produced by Ashok Leyland under a technology licence from Hino. Only in 2003 did the two companies formalise a tie-up for transfer of technology for high-powered (J series) engines.

Hence Ashok Leyland is well experienced in manufacturing Hino engines. Producing (or sourcing) components for the engines is therefore not a big deal for the truck manufacturer.

The auto components group is in its first year of operations. The division was set up with a mandate to grow a components business making use of the manufacturing and vendor development capabilities of Ashok Leyland. The company has said that it targets a turnover of $100 million in 2009. In the current year, the division expects a turnover of $10 million (Rs 45 crore). Recently, it picked up a Rs 7-crore order for gearbox components from Iran.

Mr Nagarajan said the division would focus on exporting castings, forgings, gears, machined and press metal parts. It is positioning itself as a one-stop-shop for purchase of components that can work with customers right from the stage of developing prototypes. The division is marketing itself using a `Source with Confidence' catchphrase, drawing attention to a number of factors that could give confidence to the buyer.

One is Ashok Leyland's long experience in sourcing components. The company buys components worth $650 million (Rs 3,000 crore) a year. Secondly, in case a customer wants a prototype to be designed and developed, there is the `design and engineering services' division of Ashok Leyland.

For production, there are facilities of both Ashok Leyland and group company, Ennore Foundries, which is putting up a state-of-the-art foundry near Chennai.

Mr Nagarajan expects good demand from the refurbishing industry in US and Europe, which would need a steady supply of components. He said his division could supply components 20 per cent cheaper than the existing vendors of OE in the developed countries, without any let-up in quality.

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