Automobile Ancillaries

MICO is the pioneer of Fuel Injection Equipment (FIE) in India. One of the largest auto ancillary companies in India MICO is a member of the Bosch Group (Germany) has a turnover of over Rs 16 billion and employs nearly 10,000 people. Its product range consists of FIE, spark plugs, auto electricals, transfer lines, packaging machines, electric power tools, hydraulic and pneumatic equipment and Blaupunkt car audio systems. MICO’s major customers include, TELCO, Ashok Leyland, Mahindra & Mahindra, Bajaj Auro, Kirloskars, Escorts, Eicher, Indian railways, Robert Bosch, Germany, Asian, Gulf, and African replacement market etc.

MICO’s Nashik plant (turnover Rs 4.3 billion, export oriented unit, 2600 people employed) was saddled with a huge idle capacity for its major products and profits have consistently fallen from mid 90s. The plant had limited success with cost cutting measures too inadequate to fight the perils of spiraling fixed costs. Also, the plant was not able to produce products conforming to Euro emission norms due to poor planning. The sales were not able to shore up volumes in a big way.

Export thrust: Taking U Turn

It is against this gloomy backdrop, the management decided to shift gears toward the export market. As a mid term goal, a target of achieving 25% growth in export was kept QCDR (quality, cost, delivery, reliability, responsiveness) became the new mantra for employees working at all levels. This meant increasing the export turnover from Rs 11 million to a whopping Rs 1225 million by 2005. At the plants level several steps have been initiated to realize this difficult but achievable targets:

1) Utilizing existing free capacities by intensified focus on existing markets
2) Identifying potential markets (e.g. OE/spares markets in Europe, USA, Latin America, MEA, Africa, SEA, etc).
3) Defining projects, based on current manufacturing preparedness.
4) Generating additional capacity for exports
5) Developing manufacturing preparedness exclusively for export requirements.
6) Introducing Bosch (parent company) to consolidate phasing out products at Nashik from its other locations in Europe, America, Turkey etc.
7) Benchmarking with other plants of Bosch during such product & technology transfers on QCDR parameters.
8) Setting best in class standards for the Nashik plant.

These steps have yielded fruitful result. Exports rise by 39.7% (between 1999 to 2002) in less than 2 ½ years resulting into a CAGR of 51 per cent. The company succeeded in consolidating 4 products from Bosch plants in Europe and Latin America with an additional turnover of Rs 380 million p.a. while another 5 products from Bosch are in the pipeline for transfer in 2002-03 with an additional turnover of Rs 430 million p.a. Buoyed by the successes achieved so far, MICO is now preparing its people to scale new heights every year by setting objectives at a very high level; (e.g . to achieve 50% Y-o-Y growth in exports; to attain the highest quality standards in the entire Bosch Diesel world. to be the lowest cost producer of nozzles and injectors in the world; to become the most preferred supplier to all its customer to achieve the most preferred employee status in the Indian Industry) The company wants to pursue the cost cutting drive at all levels quite seriously in the years ahead!

Bharat Forge’s Export Drive:

Incorporated in 1961 Bharat Forge Ltd (BFL) has the world’s largest single location forging facility of 1.2 lakh tpa at Pune currently. It manufactures forging components like front axle beams and rank shafts for the auto industry and well head equipment for the oil and gas industry. In early 90s when the truck sales were falling continuously , BFL’s revenues were hit badly. To reverse the trend the company had to turn its attention toward export market.

BFL’s export led growth is one of the few bright spots in the forging industry today. Outsourcing has picked up quite dramatically in recent times and in the merging scenario cost effectiveness, solution providers such as BFL will have a major role to play. Chairman and MD efforts to modernize BFL’s facilities in early 90s and the subsequent export push seem to be paying rich dividends in other wise dull, unexciting forging industry.