Rane Group and NSK of Japan have agreed to do more design and technology development in India for their joint venture Rane NSK Steering Systems’ products as they gear up to drive future growth.

“We have now agreed that we will do more design and development here in India,” L Ganesh, Chairman of Rane Group, told businessline.

Last week, Rane NSK Steering Systems’ expanded R&D centre was inaugurated at its Chennai plant. The expanded operations have most of the equipment required for its future development. Barring crash test-related ones, all other equipment for endurance and durability testing, vehicle validation, etc have been added now. For crash tests, it may use NATRIP’s facility.

Many of the engineers from India have already been trained in Japan, while some others continue to get trained. In software-related areas, the JV has hired some engineers and is likely to employ 16.

NSK has started helping engineers of the JV in India with the design and development of parts for the OEMs.

“We have a clear road-map and in the next 18-24 months we will be able to develop the electric power steering (EPS) parts in India,” said Ganesh.

Difficult times

Rane NSK Steering Systems Pvt Ltd, a 49:51 JV between Chennai-headquartered Rane Group and NSK of Japan, was facing challenges for the past four years due to the persistent warranty issue.

The company had to make provisions on this warranty issue, which had impacted its financial performance. It posted net losses of ₹99 crore, ₹65 crore, ₹81 crore, and ₹30 crore in FY23, FY22, FY21 and FY20 respectively. It had to make warranty provisions of ₹74 crore, ₹162 crore, ₹177 crore, and ₹105 crore during the past four fiscals. The total warranty provision is estimated at about ₹564 crore.

“The warranty provision which we have already made will be adequate because the claims have started coming down and that period we accepted for free replacement will get over by the end of this year. So, we think there will be no more provisions required. So that is one good news,” said Ganesh.

Also, in terms of sales, the JV had some difficulties for a couple of years. Issues ranged from the models it served in the PV industry were in low production, an issue accentuated by the semiconductor shortage, thereby impacting the company’s EPS business. But the scenario is changing now as the chip issues have eased.

“Last two months have been good and the schedule for the next three-four months is also good,” he added.

New orders

Rane NSK has bagged new orders from Maruti and other multinational OEMs. It is also in the process of getting one more big order from a large European OEM. So, order books are swelling.

The warranty provisions are over and claims are coming down. So, the company expects its sales and operations to improve in the coming quarters.

“I think the bad times are over and I hope this year onwards, things should be normalised. While it’s not going to be an overnight recovery, I think in the next couple of years the JV will recover,” said Ganesh.

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