Raymond: Engineering with Total Competitiveness [July 2012]

July 20, 2012 5:32 am

Harshal Jayavant, President – Engineering Business, Raymond Limited shares his views with Subhajit Roy about Raymond’s Engineering business and the strategies that make it a globally competitive player
Raymond’s Growth StoryRaymond Ltd. started its engineering business with the establishment of J.K. Files & Tools in the year 1949. In the last 5 decades, the company saw major progress in this business and gradually expanded its base across the globe. Today, J.K. Files & Tools is the largest manufacturer of steel files in the world with a global market share of over 30 per cent in the files business.
Subsequently, the company ventured into the hand tool business which was completely new and began manufacturing a whole range of hand tools. “Today we are the second largest pan India player in the business after Taparia. This way we have established our presence across the country. The business is also growing around 40 – 45 per cent year-on-year”, said Harshal Jayavant, President – Engineering Business, Raymond Ltd.
Ring Plus Aqua, the auto component business acquired by Raymond in 2005 in turn acquired Trinity India Ltd., a Pune-based forged component manufacturer in February 2012, marking its entry into the forged components. Talking about the significance of the forging business for the Raymond Group, Mr. Jayavant said, “Going forward we foresee significant growth in this particular sector. This year Trinity India is expecting a growth of around 40 per cent”.
Industry StatusIn the current market scenario, the Indian forging industry is likely to witness a modest growth during the current fiscal. As a result this year the Engineering business of Raymond is targeting a turnover of around Rs. 800 crore with a fluctuation of Rs. 10 – 15 crore. Talking about the impact of recent economic slowdown over his business, Mr. Jayavant said, “The business could well have gone above Rs 800 crore but recession is slowing down the growth process”.
Explaining Raymond’s growth in the Engineering sector, he said, “In 2005, Rs. 800 crore would have been a mammoth target as we were at a mere Rs. 165 crore then, but we set off on an ambitious target and achieved revenues of Rs. 620 crore in the financial year 2011-12”.
Emerging as Global PlayerOwing to several significant acquisitions, Raymond has a strong customer base in the automotive sector. Further as a sign of progress, lot of enquires are coming in from the forging industry as well. “Being in the forging industry opens up a wide spectrum for us. Five years down the line, we expect the business to be a significant global player in its product category. We may not be the largest or second largest in the world but will definitely be a globally competitive quality player”, said Mr. Jayavant.
He further added, “We have a significant presence in the non – auto sector and 20 – 25 per cent revenue is generated from this sector which comprises of industrial, defence, process industry, railways etc among others. With these plans, the company has a long term growth strategy”.
Beating Inflation through Productive StrategyRaymond never looked at the hardware business as a dying business. The company kept moving forward with an optimistic approach. Giving that the file business was considered a traditional one, its growth potential was not seen to be significant however Raymond challenged this assumption.
Talking about overcoming the challenges, Mr. Jayavant said, “India besides being low cost location has also got engineering talent. We have the potential to be globally competitive and we can take on global players with the right approach. Currently we don’t see China as a threat even in a product which is low cost where we have been able to improve margins with a right blend of technology infusion and productivity improvement. We have been able to beat inflation, beat competition, and expand our capacities. Offering customers a quality product at competitive prices is our motto”.
A robust strategy of addressing technology and productivity concerns helped Raymond’s engineering business grow.  The company strengthened the engineering team and gradually established the file factories adhering to the modern component manufacturing facilities.
Progressive Outlook“Good quality products and engineering are essential for technical products and that’s been our focus. A bad quality product will not stand the test of time”, asserts Mr. Jayavant. “We were very clear in our mind that we will make products for professionals and not focus on the DIY segment. We set a well defined benchmark for our products, the kind of product selection we did, the specifications we laid down was a right fit for a professional consumer”.  India Overtakes Brand ChinaWith reference to ‘Brand India’, the scenario has changed over the years; today we are no longer treated as ‘cheap and low quality’. However, Mr. Jayavant comments, “Thanks to some of the larger auto component players like Bharat Forge, Mahindra and Amtek who went and bought companies in Europe creating a name in the global market; Brand India has established itself as one of repute”.
“With the strong Brand India reputation, we have been able to establish ourselves across Europe, US, and South East Asia. Thailand, China, and Japan are among the other locations we are looking at for the near future”, he said.
Forging Industry Clinching Global FootprintThough the forging industry in India had experienced growth over the decades, the industry is still unorganised. Bharat Forge, Mahindra and Amtek are currently amongst the big players in this industry; however a large part of the industry is still fragmented due to the large unorganised sector. Mr. Jayavant thinks, “The potential of the Indian industry to be a global player has been tapped only by Bharat Forge so far. Mahindra and Amtek are among the top players. The global potential of the forging industry is yet to be realised. One of the reasons is that manufacturing was quite strong in Europe but with the recent recession, component manufacturing has certainly slowed down and that is a huge opportunity for a country like India. As far as the forging industry is concerned, there is where the opportunity lies”.
Brand India Going GlobalThere is considerable value addition and cost involved in components manufacturing as comparison to assembly. This is the place where Indian companies have tremendous advantages. In 2008, when the global economy was reeling under recession, the companies in Europe started looking at the Indian market with a more positive approach. Not just the low-end companies, even the high-end companies like BMW, Mercedes, Audi, and Volvo etc. started concentrating on the Indian market.
The slowdown in European economy has opened many new vistas for Indian manufacturers. According to Mr. Jayavant, “In the near future, a lot of European markets will open up for Indian companies. We are now having a very clear focus for these markets. Also, our ability in offering European quality at Indian prices is the major advantage that will attract many global players who are looking at cost reduction at this crucial juncture”.
Growth StrategyMr. Jayavant highlights, “There is no shortcut in Raymond’s approach when it comes to deliverance. Superior technology, assurance in quality, and reliability are the hallmarks of Raymond in terms of delivery and service level”. In an automobile industry when an OEM is running an assembly it is not affordable to have a single minute stoppage on the line as it involves huge cost. That is where the reliability of the supply chain lies, ensuring that the supply in time and inventories always in line.
Expansion and Future plansTalking about the company’s future plans, Mr. Jayavant said, “Five years down the line the engineering business plans to grow by atleast 5 times”. In order to achieve the same, Raymond has put together a comprehensive strategy of both capacity expansion and technology infusion to deliver high value added components. “Our strategy is to progress aggressively in the areas like engine, power train components and we see huge potential in it”, he adds. Apart from setting up or expanding facilities in India, the company plans to set up an international manufacturing facility.
Assured Competitiveness“We are building capabilities and not relying on cost alone, as we are not a low cost player. So whenever we discuss with customers emphasis is laid on our capability to deliver quality, reliability of service levels besides cost competitiveness’ said Mr. Jayavant.