We are expecting to build land banks in all auto regions: Sunil Bohra, UNO Minda – ET Auto

baua



Sunil Bohra, Group CFO & CEO, UNO Minda

Sunil Bohra, Group CFO & CEO, UNO Minda, says “we are expecting to build a land bank in each of the auto regions. We already bought around 86 acres of land in Pune, in Maharashtra, we are working to acquire land in Gujarat, in Haryana and also in Tamil Nadu. So overall, in addition to INR 700-800 crore of capex, we might be spending somewhere around INR 500 to 600 crore on land in next six to nine months.”

Let us talk about the new plant that you are putting up because it is an entry into seat recliners for four-wheelers and the passenger vehicle space. What about the new products that you will start manufacturing there? What is the revenue potential that you foresee?
Sunil Bohra: So, the new plant, which we have just commissioned in Gujarat, is for a mechanism for seat recliners, not even the full recliners. When we entered into a JV with Tachi-S, which is the global major in seating, PV seating, our endeavour was to move into seating business step by step. We already are present in the seating business through Harita seating, which we acquired two years back. We are already in two-wheeler seating, CV seating, off-road seating, but we are not in a big way in PV seating. So, that was the background for the joint venture with Tachi-S.

In the first phase, we are just manufacturing the mechanisms for the recliners and the second phase, obviously, we intend to do the full recliners and as we move forward, the full PV seating. As of now, this is a very small component. I would say it is a foot in the door in the PV seating segment.

How meaningful can this business likely become in two to three years’ time?
Sunil Bohra: This business has a huge potential. As we see today, the PV seating business has overall a potential between INR 8,000-10,000 crore in the country. As of now, what we are doing, this small mechanism has INR 30-40 crore of revenue potential in next two years. But it puts us into that platform where we can make a big entry into the large segment which you just spoke about. So, while we were constrained in terms of our offering, as of now for PV seating, this definitely can become a huge revenue growth forward, definitely two years is a very short timeframe because once you get a business from a customer, it takes at least two to three years to get into SOP.

In two to three years, definitely we do not expect it to be very meaningful compared to our size. But maybe in two to three years, we expect to get some more business so that we can actually put on our acceleration to expand our facility in Gujarat.

We are all observing how more scientific and technologically advanced seating is becoming in a vehicle. There are air ducts in a seat now, there is much more reclining capability of a seat, plus electronics adjustments. It appears to be a complex piece of machinery and does not seem to be very simple. Are the margins also higher?
Sunil Bohra: I would say it is a little premature for me to speak about margins because we are in a competitive world and while you would endeavour to improve your margins by providing better technology, better specs, but we are conscious of our competitive forces and our current visibility is we should be able to maintain our current margin profile given the competition which is there in the country already and there are a lot of players who are looking to expand their offerings.

But yes, you are right that the seatings are becoming a lot more complex. We already have suspended seats for our CV offering, which the kit value goes almost like INR 15,000 to INR 20,000 a seat, that is the kind of offering we already have and we already have business and are exporting as well.

Coming to PVs, a lot of features are coming in, maybe a seat ventilation module, maybe there are multiple features in the seating, etc. We are already having some business on the heat and cool seat because in the Indian environment the two-seater seats specifically where it is exposed to open air, people would like if there can be a mechanism where it can bring down the temperature in summer or improve the heating in winter.

So, we are working on some of those features as well. There are a lot of technology upgradations happening in seating as we move forward and some of these products were already either in production or will gradually get into production soon.

Ls also understand the two new EV plants that have been commissioned. What kind of order inflow are you expecting? What kind of ramp up are you looking at and the revenue potential here?
Sunil Bohra: In terms of the revenue potential, let me take a step back. We all know about the FAME subsidy getting impacted somewhere in June. So, Q2, the industry volumes have been somewhere around, for two-wheelers specifically around 60,000 vehicles per month on an average, which has already moved to like in October it was 74,000 two-wheelers and in November it was roughly like 90,000 two-wheelers.

Our belief of the long-term growth of the two-wheeler EV segment continues and it actually has demonstrated that the impact of the FAME subsidy reduction was definitely a short blip and we move back to the growth momentum. As we move towards our entire EV roadmap going forward and you asked what is the potential, we already have order book of almost like INR 3,000 crore per year of peak annual value which somewhere we endeavour to realise in between FY26-27 and this includes both our EV specific components also and our existing products also like your seating or switching or a lamp or alloy wheel, etc. So, we are very bullish and aggressively working on our EV portfolio and working to capitalise the large part of the growth potential which is available.

Ola Electric is lining up for IPO. At the same time, we are seeing other two-wheeler companies rapidly upping their own game as far as EVs are concerned, the numbers speak for themselves. When you talk to some of your clients, what is your outlook on the growth front?
Sunil Bohra:. Almost all the players in the country, and specifically the existing players who are also in the ICE segment, are working very aggressively in the EV space. I am sure you will see multiple launches from them in the next fiscal. It would not be fair for me to name anybody, but we are working with almost all of them for one company or the other.

People are working in terms of the fresh EV launches, the conversion from ICE to EV. And I am sure in next financial year, there will be multiple launches and people who have or the companies who have not been so far launching, they also are working very-very aggressively to catch the EV boom and ride on it as we move forward.

Okay, fair enough. What about your capex plans lined up, some acquisition plans, are you looking to raise any money via the NCD route to fund your acquisitions?
Sunil Bohra: Honestly, we have been working in terms of our capex plan. When we started the year, our endeavour was to spend something around 700 odd crores of capex, but the board has also approved two major expansions, one major expansion this year and another was we are working to build our sort of future land where we can grow our business as we move forward. Because we have experienced in the past that while there is a business, there is an opportunity, acquiring land has always been a challenge, which had delayed some of the projects.

So we are building some of the land bank. We are expecting to build a land bank in each of the auto regions. We already bought around 86 acres of land in Pune, in Maharashtra, we are working to acquire land in Gujarat, in Haryana and also in Tamil Nadu. So overall, in addition to INR 700-800 crore of capex, we might be spending somewhere around INR 500 to 600 crore on land in next six to nine months because we are primarily talking to the government for the land acquisition. And you know that process takes time.

We have been working on that for quite some time now. But hopefully in the next few quarters, we should be able to get that land and one of the projects which we have already approved, the board has approved that expansion of a four-wheeler alloy wheel plant with an investment of almost INR 600 crore in the last board meeting in November. For that also, we are looking for land and that will be part of this land investment amount which I just spoke about.

  • Published On Dec 26, 2023 at 01:29 PM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETAuto App

  • Get Realtime updates
  • Save your favourite articles


Scan to download App


APM Terminals Elizabeth, a division of shipping giant A.P. Moller-Maersk, is dipping its corporate toe…

Mercedes-Benz High-Power Charging North America, a joint venture between Mercedes-Benz Group and MN8 Energy, is…

How are BMW and VW using AI in their EVs? Why are lawmakers pushing back…