Pravin Malhotra, chairman and MD, Nipman Fastener Industries, speaks to Amit Panday about the transition from a products company to a solutions provider, targeting aggressive growth and pursuing exports as well.
13 Mar 2015 | 4281 Views | By Amit Panday
Nipman Fastener Industries, which mainly caters to the two-wheeler industry, has made a foray into the passenger car segment with an order from Renault-Nissan. Pravin Malhotra, chairman and MD,Nipman Fastener Industries,speaks to Amit Panday about the transition from a products company to a solutions provider, targeting aggressive growth ...
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Nipman Fastener Industries, which mainly caters to the two-wheeler industry, has made a foray into the passenger car segment with an order from Renault-Nissan. Pravin Malhotra, chairman and MD,Nipman Fastener Industries, speaks to Amit Panday about the transition from a products company to a solutions provider, targeting aggressive growth and pursuing exports as well.
The two-wheeler segment dominates the share of revenues for Nipman Fastener. You have bagged an order from Renault-Nissan recently. Is this a new direction of growth going forward?
Yes, we are now foraying into the passenger car segment on the back of an order from Renault-Nissan, and this a new direction of growth for us.
We specialise in cold forgings and make fasteners for two-wheelers. The 2-wheeler industry in India is around 16 million units per annum currently. By 2020, this would be close to 30-35 million, and by 2025 this figure would reach around 70 million. So we will stay in this fastener business for two-wheelers because that’s where the volumes are, and along with that we will grow in the passenger vehicle segment as well.
Combining both, it makes economic sense to set up new plants. We are looking at Gujarat and Chennai to set up new plants and I expect that we will be able to do so in the next 3-4 years. We have four plants in northern India – Ghaziabad, Manesar, Haridwar and Bawal (Haryana).
Further, we want to aggressively pursue exports. Because fasteners are a commodity and the larger the market, the better it would be in terms of business economics. To scale up further in terms of volumes, we need to eye exports as well.
Nipman Fastener’s turnover was nearly Rs 160 crore for FY2013-14. What are your growth expectations from FY2014-15?
Going by our conservative estimates, we will grow by 15-20 percent for the current financial year. We have a new plant at Bawal, which has a potential of pushing our growth curve beyond the said estimates. So in FY2015-16, we are expecting good growth and I believe by March 2016, we should be close to Rs 210 crore. Once the Bawal plant becomes completely operational, we expect the turnover to touch Rs 275 crore later that year. This would be only through the fastener business. We have a CAGR of 18 percent.
How much have you invested in the new Bawal plant?
We have invested close to Rs 60 crore in setting up the Bawal plant. Our next investments would be in Gujarat and thereafter Chennai. I estimate that the Gujarat plant will attract an investment of Rs 30-35 crore.
At Bawal, initial operations commenced in January 2015; the plant will be fully functional in March 2015. Each plant has given us better economics and learnings, and we have implemented them at Bawal. With progression, the level of automation goes up, manual labour work reduces, productivity increases, flow of work improve, and many new technologies are implemented.
What is your impression of the Make-in-India initiative of the new government? Do you think this is changing India’s manufacturing image on a global scale?
A month ago I was in Japan as a part of a delegation and we met senior officials of an OEM. What I noticed there was that our prime minister has a massive effect over there, and the Japanese are looking at India very aggressively. The platform on which they received us was also very good and impressive.
So while I see that the ground reality is that we still need to pick up from where we were, but undoubtedly, the government’s Make-in-India initiative is picking up momentum internationally, especially with the kind of enquiries we are getting. Companies which were looking at going to China earlier are now considering India as well. Among the neighbouring countries, besides China, we need to compete with Thailand, Vietnam and other countries.
Do you think Vietnam can be a lucrative opportunity for Indian suppliers in the near future?
As of now, there are very few Indian companies which have gone there, and they are reportedly going well. There is a huge two-wheeler market in Vietnam. I believe that Indian companies are relatively better placed in Vietnam in terms of product quality than their Chinese counterparts.
While you specialise in two-wheeler components, are you not tapping growth in the rising midsized (250cc-850cc) bike segment?
We are definitely looking at that market and we are in touch in some OEMs in this space. This is a two-pronged strategy – having a presence in the volume segment as well as the niche segment.
We do not compromise on our shopfloor practices, all our processes are world-class. Till date we have never lost any customer. It is because of our rigid quality control practices that we are awarded with an order from Renault-Nissan.
In our Bawal plant, where we have good space available, we are dedicating a complete floor to design engineering, which will soon take us to an R&D level. The idea here is to become a solutions company from a product company, and we are working towards that.