Two-wheeler major Kinetic Engineering is planning a vendor rationalisation drive to reduce components and inventory cost. It has already kicked off a cost reduction agenda in the current fiscal that would result in a 8 to 10 per cent fall in component cost.
Joint managing director Sulajja Firodia said the company had planned to restrict itself to only assembly, painting and manufacturing critical components in the long term. "Apart from reducing manufacturing overheads, outsourcing of components has the potential to reduce vendor cost," she said.
However, Firodia said it would be difficult to attain the rationalisation given the lack of large vendor base. At present, the company is in talks with vendors to explore the possibility of process improvements and value engineering leading to cost savings.
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Sulajja said, "Threat of competition from China has made us to realise the opportunity to reduce the manufacturing costs and also high import duty cannot offer lone-term protection against competition. Hence, Indian manufacturers need to look at viable and competitive long-term strategy." More importantly, she said, the government should also play a pro-active role in creating 'right' manufacturing climate with flexible labour laws.
On exports, she hoped that it would account for Rs 80-90 crore during the current fiscal of the projected turnover of Rs 1,000 crore. Kinetic plans to export 12000 units of mopeds and motorcycles and 10000 units of scooters.