When the Indian motorcycle industry used little or no automotive electronics, Vijay Chheda boldly decided to enter this segment in 1995. As Indian two-wheelers started competing globally, they got more high-tech, and Chheda’s investment began to pay off. Chheda Electricals and Electronics Pvt Ltd (CEEPL) is now an electronic automotive products supplier to almost all of India’s two-wheeler makers. Vijay Chheda, the company’s managing director, who has dreams of taking his empire beyond India’s borders, shares his business plans with Kaustubh Kulkarni. Edited excerpts.
The Indian two-wheeler segment was not performing well for almost a year. How did this affect your business?
The situation was slightly tough in the Indian two-wheeler industry for obvious reasons. However, although major players such as Bajaj Auto and TVS did not fare well, Hero Honda made up for the drop in demand. The overall economic situation itself was tough, but through innovative and advanced products, we delivered good results.
Any comment on the opportunities in the automotive electrical and electronics segment?
The use of electrical and electronic equipments is growing with every new product that comes into the market. Vehicles are being made more user-friendly and this opens up huge opportunities for companies in the automotive electrical and electronics space. The recent Lexus launched in Japan has 147 electrical motors to provide various kinds of comfort to passengers. As cars and vehicles become more and more intelligent, the share of automotive electronic equipment will increase. Hence, globally, this sector will grow even faster than the actual industry.
Who all do you supply equipment to? In the wake of the slowdown, was there an alteration in the credit period for a component maker like you?
We supply digital displays and other electronic parts to Hero Honda, Bajaj Auto, Honda, TVS and other major two-wheeler makers in India. Our parts are also fixed on motorbikes manufactured by Kawasaki in Malaysia and the Philippines. Motorbike buyers are looking for LED displays and other digital accessories in bikes. Hence, we have huge potential lined up in this segment.
To what extent do you outsource your manufacturing processes? Do you also adopt sub-contracting to cut costs?
We do outsource a number of smaller parts to plastic parts maker. A lot of raw material is also bought by us for obvious reasons. Hence, there is a pre-defined percentage of outsourcing that we do. But we avoid sub-contracting, because we are into niche product. Hence, we do not sub-contract assignments.
What kind of growth do you plan to register this year?
We had clocked a turnover of Rs 40 crore in 2008-09. In this financial year we should grow by at least 10 per cent. Our total group revenue stood at Rs 100 crore last year and this will grow at around 8 per cent this year.
How do you see CEEPL growing over the next five years?
There is huge market potential to be tapped in the overseas segment. As of now, only 5 to 7 per cent of our sales happen in the overseas market. But in another five years, I see this hitting almost 40 per cent. This is because overseas markets provide greater flexibility and wider opportunities. Digitalisation in the Indian market has already reached its peak.
