In a new weave, Raymond to enter forgings

Raymond’s engineering business unit is scouting opportunities to enter the forgings segment during this year to supply forged machined components to original equipment makers (OEMs), even as it expands its existing starter rings and flex plates businesses.

Raymond, more popular for its apparel business, has lined up an investment of up to Rs200 crore for the foray, which could be through an acquisition.

“We are looking at offering a bouquet of components ranging from connecting rods to axles, once we start the forgings business,” Harshal Jayavant, president - engineering business, Raymond, said.

With the new business, Raymond’s engineering group has set a target of touching a cumulative turnover of Rs1,200 crore in the next five years. A plan to get listed on the bourses is also on the cards.

Meanwhile, Jayavant and his team are busy chalking out new business plans for Ring Plus Aqua - the group’s key supplier of starter ring gears and flex plate assemblies to OEMs.

The company which clocked Rs112 crore turnover last fiscal has set a target of touching the Rs150 crore mark this year. The additional business is expected to come from some new premium clients. Luxury carmakers, Mercedes Benz and BMW, are currently auditing Ring Plus Aqua’s product and processes before taking it onboard their vendor lists, sources said. Supplies to the prestigious clients are expected to begin by December.

In the domestic market, Ring Plus Aqua is the sole supplier of starter rings for the Honda City. It also supplies to Hyundai’s i10 and i20 models and Ford’s Figo. In the commercial vehicle industry, it is a major supplier to Tata Motors. Almost 90% of the demand for starter rings for Tata vehicles is met by Ring Plus.

To meet the long-term demand, Ring Plus is also expanding its production capacity of 3 million units to 4.5 million units by end of the next month. Around ¤20 crore will be invested for the expansion. Between the company’s two key businesses of starter rings and flex plates, the latter is expected to show a stronger growth.

Flex plates are used in automatic transmission vehicles, so there is a much stronger demand for this component from overseas customers.

Jayavant said, “With the current business development pipeline we expect the growth in ring gears to be in the range of 20-30% year on year over the next four years. Flex plates are expected to grow more at 40-50% owing to their smaller base and the rapid growth of automatic transmission across the world.”

The expansion activities are being carried out currently, but Jayavant is bracing for a temporary slowdown in the market. “Next six months, there could be subdued growth as credit tightens and interest rates go up,” he said.

The writer is with Autocar Professional.