 "Clutch maker Setco eyes plant in Russia, to foray into LCV and farm equipment")
The company already operates two assembly units overseas, one in Manchester, UK and another in Nashville, Tennessee, US. "We operate in a hub-and-spoke mode. Our main plant is in Kalol, Gujarat, which supplies to assembly plants in the UK, the US and also in Uttarakhand. We are exploring opportunities to set up an assembly plant in Russia as well, and are working with OEMs (original equipment manufacturers) on that front," said Udit Seth, executive director of Setco Automotive adding that it would take some time before things can materialise. He did not wish to comment on the potential investment in such a project.
The company is also in the final stages to appoint parts distributors in North America. Seth said he would be visiting the US soon to finalise the deal.
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Setco accounts for nearly 100 per cent requirement of major players like Tata Motors, Volvo Eicher, AMW, and about 60-65 per cent of Ashok Leyland's requirement. As Seth says, nine of the ten clutches that go into MHCV segment are manufactured by it.
The company now aims to expand its reach by foraying into the LCV and farm equipment sectors. It has been investing about Rs 30 crore annually on product development and plant upgradation.
The MHCV segment saw some turnaround in FY15, with sales of 195,000 units. However, this number is still below the peak of 240,000 units in 2011. Entering into the LCV space, would give the company access to another 380,000 units per annum market, besides the 550,000 units tractors segment.
As for its global aspirations, the company aims to become a part of the global integrated supplier programmes of OEMs. As more and more multinational automobile companies are looking at having a common global platform for its cars, they are looking to have integrated suppliers who can supply across geographies. As such Indian auto component makers are thus looking at setting up assembly unit overseas.
Seth said in the clutching space, it is also important to be close to the client, as servicing is also required on a regular basis. Setco had forayed into aftermarket business in the last quarter of 2013-14, at a time when the MHCV sales were on a slow lane. The strategic decision paid off for the company, and now nearly 20 per cent of its revenues (Rs 458 crore in FY15) come from the aftermarket business. Setco already has 46 distributors, 4,000 dealers and 12,000 mechanics across the country.
This apart, the component maker has recently invested about Rs 180 crore in setting up a foundry unit with a capacity of 4,000 tonnes per month at Kalol. "We used to buy our castings from outside, and now not only meet our own requirements, but also supply to others. Many OEMs with whom we work, are looking for a committed foundry partner," Seth said.
On a whole, the company expects the OEMs in the commercial vehicles space to clock 15-20 per cent growth over the next three years, and aftermarket demand growth would be in double digits too.
EYE ON GROWTH
| Setco currently accounts for nearly 100 per cent requirement of major players like Tata Motors, Volvo Eicher, AMW, and about 60-65 per cent of Ashok Leyland's requirement
| The company plans to foray into the LCV and farm equipment sectors. It has been investing about Rs 30 crore annually on product development and plant upgradation
| The company aims to become a part of the global integrated supplier programmes of OEMs as more and more automobile companies are looking at have integrated suppliers who can supply across geographies