Hitachi Metals forges JV with Vikas Group to make India production hub
Vikas Group has signed the JV to strengthen foundry business and will invest Rs 300 crore in the next three year to expand this business.
The Group intends to invest Rs 600 crore in the next three years at the group level to expand its top line revenue at Rs 2500 crore. Of this amount, the company will invest Rs 300 crore in foundry business, thereby targeting a revenue contribution of Rs 500 crore from foundry business by 2017 from the current around Rs 70 crore. While other Rs 300 crore will go into other group companies.
The investments will go into upgrading the existing two foundries and adding new capacity to increase the total capacity of 5000 tons/month. With this JV India will become manufacturing hub for Hitachi Metals & Nam Yang Metals.
“We have a very strong EBITA margin in the other business segment going upto 17% but foundry was not so strong. We hope that with this new agreement we will be able to improve in this direction,” said. Abhimanyu Sharaff, Director & second generation entrepreneur at Vikas Group.
The Rs 15,00 crore Indian component supplier claimed to have maintained a CAGR of around 25% in the last four to five years with a stable average group level EBITA margin of around 10 percent. “This year it’s going to be tough and we hope to grow about four percent,” Abhimanyu added.
In addition to the current products being manufactured by Vikas foundries like Engine & Transmission parts, the new JV would bring technology to develop suspension parts like steering knuckles and also capability for light weighting of castings. Initially, Vikas Group had signed a Technology Transfer agreement with Nam Yang Metals last year.
Moreover by adding India to the locations already producing the high-‐toughness ductile Iron castings (HNMseries) located in Japan (Moka works), Korea (Namyang Metals) and the U.S (Hitachi Metals Automotive components USA, LLC), Hitachi Metals will now have four global manufacturing and supply locations, with an eventual combined capacity of 20,000MT/Year. This will enable the company to dynamically respond to worldwide automotive demand as the Hitachi Metals group strives for additional worldwide growth.
The Vikas Group employing 3000 people across 12 factories has chosen backward integration, advanced technology and business innovation to build its fortune in the near future. Two years ago, group's another company Sanden Vikas owned Deming Prize for continuous improvement in manufacturing process and innovation.