Jamna Auto aims for a larger pie in auto-parts market, adds new products

Randeep Singh Jauhar, vice-chairman, Jamna Auto Industries had just passed out of college when he decided to take over his father’s business — a rickety garage with mud flooring and no lighting, whose customers were mostly state transport undertakings.

The business has come a long way since then. Jauhar is credited with  transforming Jamna Auto from a single-location, single-product one into a multi-location, multi-product company manufacturing leaf and parabolic springs for auto majors. It has a market share of 70 per cent in India’s truck market and is now the country’s largest automotive suspension spring manufacturer, and among the top two in the world. 

Maruti was building its new products (the Maruti 800 and the Gypsy), for which it wanted parabolic springs. “We pitched our product and it got selected.” Jauhar says. After that there was no looking back. Orders followed from firms like DCM Toyota, Swaraj Mazda, Nissan, and Eicher Mitusbishi, which were all setting up shop in India.

The parabolic spring segment, the company’s main portfolio, is rapidly expanding, as leading manufacturers shift to it owing to the need for lighter products in order to meet Bharat Stage (BS)-VI norms. Rising demand for high-tonnage trucks, which contain more springs per vehicle, combined with increasing demand for non-conventional products, is another positive. 

Jamna Auto has tied up with the US-based Ridewell Corporation for air suspension and lift axles. Its lift axles are witnessing increased market penetration.

Jamna’s net profit has grown at a 62 per cent compounded annual growth rate over the past three years to Rs 125 crore, while revenue grew 16.6 per cent a year in the same period to Rs 1,738 crore in FY18. 

Jamna Auto has been expanding its manufacturing base to come closer to customers. It has nine plants strategically located in seven states and is setting up two new plants — at Pithampur near Indore and Adityapur near Jamshedpur. It is increasing capacity through both greenfield expansion and modernisation of existing facilities, all funded through internal accruals. It boasts a 30 per cent-plus return on net worth and 40 per cent-plus return on capital employed. 

Jauhar says implementation of the goods and services tax (GST) bodes well for the company, as it will formalise the auto-parts market. “Earlier, many companies had an advantage over us, as they didn’t pay tax. GST will weed out those and make the industry stronger.”

Jauhar credits the company’s consistent success to its obsessive focus on cost control and internal design capability, which drives down cost, compared to other global manufacturers. “Our investment turnover ratio is four times the normal than any other auto component manufactures. Our wages and salaries are seven per cent of revenue — lowest in the auto industry. We sweat our assets as much as possible. Another component is our R&D facility. Whereas other companies import components, we get the design drawing and make the product in India. It leads to a huge cost saving.” 

Jamna Auto is also connecting with a larger number of retailers, distributors and mechanics to expand its presence. 

The focus on cost control has paid off. While other auto-parts manufacturers faced the brunt of the slowdown in India’s auto market due to regulatory changes and a weak economic scenario, Jamna Auto sat pretty. “Our asset size is low. Our expansion plans are mandatorily from our internal accruals, which has made us a zero-debt company. Hence recession didn’t impact us much,” Jauhar says.

The next focus of the company is to increase its share of the auto-parts market. It has begun making complete suspension systems and plans to bring in new products such as stabiliser bars, U-bolts and trailer suspensions. 

“Instead of making one spring, we are making the whole suspension system, which has 60 items, and costs Rs 1.5 lakh for a truck. This way, the content in the vehicle goes up by 1.5 times in a market growing at 15 per cent a year, and market share goes up. So we attack all three. That’s the strategy,” Jauhar says.