Jamshedpur-based sheet metal fabricating company – Highco Engineers Private Limited is looking at expanding its product portfolio to enable it to
strike a balance during the slowdown in future. The company has taken a decision to get in to those non-automotive segments that are not affected
much by the cycles of slowdown.
Speaking to Auto Components India, the Executive Director and CEO of Highco Engineers, Tapas K Sahu said the objective for the company to make non-automotive parts is to derisk the business. This is because of downturn in the auto industry that used to occur once in 6 years earlier is now relapsing within 3 to 4 years. Moreover, the duration of the present slowdown is the longest in the history. Its a double whammy as the length of the slowdown is longer and recurs in less than 4 years; therefore, Highco is looking at options to enter non-automotive, he said.
Elaborating his views, Sahu said that till few years ago Tata Motors had the major market share but off late 7 to 8 competitors have come in to the market. For the component maker that is based in Jamshedpur, where the logistics is anything to write home about, the dire need is to change the strategy and get in to businesses like material handling or have customers who are in a segment that is not affected much by recession such as cranes etc.
The company is working with Kolkata headquartered Tractors India (TIL). It is also looking at catering to Indian Railways that has standard requirements. “The idea is to eliminate dependency on a single sector,” he said. Initially, the company began with a single customer
and gradually acquired multiple customers but in the same segment. When asked to elaborate on the components the company plans for the
non-automotive segment Sahu said Highco will be looking at supplying parts for conveyor, cabins and fabricated assemblies for material handling
equipment manufacturers. It will also be looking at supplying parts for concrete mixers. It is currently developing cabins for TIL. Besides, it has plans to supply bigger parts for the railways weighing 2 to 3 tonne like short and long hoods for the complete engine. It is in talks with Diesel Locomotive
Works, Waranasi for the entire carriage and the engine frame.
Asked about opportunities from the new players in the CV space who are very quality conscious but still want something from Indian suppliers, he said it is necessary to consider some issues including the location since the logistics cost for sheetmetal component is generally high. For example logistics becomes an issue if a skin panel is to be transported. The damages and dents in transit are so high,that the customer will not accept the component; therefore, the losses are steep. He continued that they are the single largest component manufacturer for Tata Motors ‘Prima’ truck series supplied worldwide which is equal to or much better than the product fielded by the newcomers. Highco has invested Rs 18 crore on their world truck project, he indicated. Sheet metal work is labour intensive and low technology – just a pressing activity that they do. Therefore, the value addition comes from assemblies and hence Highco is focusing on it. Secondly, customers’ requirements are going up to such an extent that things are not becoming viable.
Coming to the funds required he said that sheet metal components require huge investments; multiple large machines, each costing Rs 1.5 crore to Rs 2 crore are required. Besides, it is location dependent, due to logistics constraints. “We were planning to put up a factory in Lucknow and even purchased lands, but had to stop because of the slowdown. All the supplies are going from Jamshedpur as of now; however, it will not be for long. Since the customers are paying for the logistics cost, they will insist us to have local operations,” he said.
Sahu clarified that, “the dynamics have changed in this business – you need to have volumes to sustain yourself; if you are working with low volumes then survival becomes an issue. Today the main problem with Tata Motors is volume. All of us in Jamshedpur have grown with Tata Motors in the last several years; people with annual turnover of Rs 5 lakh have reached to Rs 5 crore on a monthly basis.” The OEM is also having problems as competition is growing and requirements are going up, which they have to satisfy to compete and stay in the business.
On a suggestion of sending some CKD parts for frames and creating a small assembly facility near the customer he said this was the plan to start with for the Lucknow plant. “For the first one and a half years we have planned to send CKD parts and have a small team to assemble near the site because investing Rs 8 to Rs 10 crore on a new plant did not make sense. We don’t get a penny extra from the customer for that; only thing is the logistics problems are reduced. At the end of the day we should be very aware that it is a competitive market; if the customer says to reduce cost we have to reduce and it is just a matter of time because as things become difficult for the customer so will it also become difficult for us. We need to find innovative ways for cost reduction and do value engineering. It has to be a continual progression, covering process, materials and other activities; customers are also trying to do this; for instance, trying to convert from steel to carbon fibre and finding other alternatives.”
Queried about entering the passenger car segment he explained that the passenger car is a different ball game altogether. When Tata Motors planned
for Nano in Singrur, after lot of deliberation Highco planned to enter the business and buy lands. However, it backed out as it did not get land in the
vendor park. Moreover, “we were not comfortable working in West Bengal outside the vendor park because of labour issues and related problems.
Finally it turned out to be a blessing in disguise for us. However, the Singrur fiasco was a huge loss for Tata Motors and the country,” he said.
Protoshop
The company has one of the biggest facilities in sheet metal fabrication and is now getting into higher technologies by deploying prototype shop
with a fabrication and tooling facility, and a design and painting set-up. The protoshop will facilitate those customers who are developing prototypes.
It has reduced the development time from few months to few days, due to the presence of fast fabrication set up, laser machines, supportive tooling
facilities and a captive tool-room. Besides, it also has a design section and a paint shop. “We have graduated from a component business to a higher assembly business,” he said.
Highco came into existence in 1979. The company now has four factories, three in Jamshedpur and one in Dharward catering to several customers including Tata Motors, Wabco India, Tata Hitachi (Telcon), Tata Marcopolo and Tata Johnson. Basically the company caters to commercial vehicle segment. Of the total revenue the company gets about 65% from Tata Motors – 15% each from Telcon and Wabco India and the rest is from other customers. When the company expanded its clientele in 2007 it had invested at its plant in Jamshedpur and Dharwad. “We learnt a lot working with Wabco in terms of technology, accuracies and handling of high volume material that helped us in updating us on the whole,” he said. The company makes several components for Tata Motors that go into the chassis and child parts for the cabin. Currently it makes more than 1,500 components for Tata Motors comprising of around 600 plus part numbers and supplies to the plants in Jamshedpur, Pune and Lucknow. Highco has been manufacturing the sub-structure on which the cabin is mounted for trucks and tractors. This is a critical part having a dimension of 2400mm x 2200mm as it holds the driver seat and the entire cabin per se. Till date the company has been a single source for the OEM. In addition the company has been supplying 3 high precision and high volume components in about 9 variants to Wabco India. During peak times, the company supplies about 6,000 pieces a day of powder coated material to Wabco India’s plant in Jamshedpur and Chennai.
For Telcon the company supplies the entire base plate, which includes the seating arrangement, electrical connections, hose assemblies and tanks for fuel and hydraulic fluid. It also supplies counterweight for the construction equipment maker. This is a huge component weighing around 4 tonne. The volumes are low at present but the company is working on to increase it further, he indicated. For Tata Marcopolo in Dharwad, Highoco supplies bus body parts. It has a separate line for GI sheets. The company supplies the driver platform where more than 180 items are assembled. The company has also developed more than 40 parts for other models of the OEM and towards this it has set up a dedicated facility with a built up area of 30,000 sq.ft, he added. ACI
