To adopt latest technology, increase capacity at new locations
Sona Koyo Steering Systems will spend Rs 30 crore each in FY13 and FY14 on relocating the manufacturing operations at Gurgaon to five other locations.
It will complete the relocation in the next one-and-a-half years, according to Surinder Kapur, Chairman.
Manufacturing lines had been added at the Gurgaon facility over the years, as and when new orders were obtained. The plant itself was nearly 25 years old. These lines were now being shifted to the new locations to adopt the latest manufacturing technology and to improve efficiencies, Kapur said.
The manufacturing operations at Gurgaon will be shifted to three plants in Dharuhera, also in Haryana, one each in Sanand, Gujarat, and Chennai. Apart from efficiencies in manufacturing, the shift will also help the company increase capacity.
“We expect the automobile industry to touch the five-million units mark in 2016. We currently have a more than 50 per cent market share and we would like to maintain that share,” Kapur told Business Line over telephone today. From about 1.8 million units capacity now, Sona Koyo hopes to increase capacity to 2.5-3 million units over the next three years.
In an investor presentation, a copy of which has been sent to the stock exchanges, Sona Koyo Steering Systems has said that it intends to sell 14 acres in a prime location in Gurgaon, which will reduce leverage.
According to the presentation, the company incurred a capital expenditure of Rs 114 crore in FY12, including Rs 30 crore on the relocation.
The company said, as part of backward integration, it was putting up an aluminium die-casting facility at Dharuhera, at a cost of Rs 50 crore.
Four machines with a cumulative capacity of 1,850 tonnes were being installed by end of FY13. JTEKT Corporation of Japan, which holds about 20 per cent stake in Sona Koyo Steering Systems, was providing the technology for the aluminium die-casting unit.
Patent for steering technology
According to Kapur, Sona Koyo had developed and obtained a patent in the US for Electronic Power Assist Module (EPAM) technology for steering systems.
This would help the company enter a new segment of steering technology for off-road vehicles and also expand its customer base.
The company had started supplying to John Deere for its farm equipment division and Clubcar (golf cars) in the US. Sona Koyo was also in talks with leading tractor manufacturers in India for selling the steering systems.
The presentation pointed out that Sona Koyo’s dependence on Maruti Suzuki for business had come down from nearly 55 per cent of turnover in FY10 to 43.5 per cent in FY12 and 41.5 per cent in the first half of FY13.
In the same period, the share of Mahindra & Mahindra to the turnover has gone up from 9.7 per cent to 13.4 per cent in FY12 and 18.4 per cent in the first half of FY13.
However, the company has said that production disruption at Maruti Suzuki’s plant had caused decrease in its sales contribution.