Home to most of the forging industry, Ludhiana-based Kay Jay Forgings Pvt Ltd’s name was incorporated in 1988, but its roots can be traced to 1975 when it produced cycle parts like pedal cranks. The first auto part that the company made was in 1983, when it did the crankshafts for Majestic Auto.
“The market for us was static till about 1992, after which the real boom happened. Despite Hero Honda being present since around 1984, the market was primarily scooter driven. Only when the likes of Bajaj and TVS entered the motorcycle market, did we see a boom” says Amit Kothari, Joint Managing Director, Kay Jay Forgings Pvt Ltd.
India is today the fourth largest automotive market in the world and the players in the manufacturing value-chain reflect the strides it has taken. When the Indian automotive market opened up after liberalization in the early 1990s, the global auto makers set base in the country in both two and four wheelers. Slowly and steadily as the localization needs of these OEMs grew, a strong auto component manufacturing base started to take shape.
The auto component makers had to meet the global standards, which ultimately meant they became competitive on an international stage. Today, Kay Jay Forging has a complete in-house facility to perform the diversified functions of manufacturing, machining, processing, heat treatment and testing. They also have precision sheet metal components like the fuel tank, tool box, engine cover, side faring, gear shift lever, and brake pedal.
According to the Association of Indian Forging Industry (AIFI), based on their installed capacity, the forging units may be classified as very large (capacity above 75,000 MT), large (capacity above 30,000 to 75,000 MT), medium (capacity above 12,500 to 30,000 MT), small (capacity above 5,000 to 12,500 MT) and very small (capacity up to 5,000 MT).
In India it is clear that a majority of the units, or 83%, falls under the small and very small, while only about 8% can be classified as very large and large units; the balance of about 9% constitute the medium sized units.
Source – AIFI
In terms of geographic spread AIFI states major forging clusters can be found in the states of Maharashtra, Punjab, Gujarat, Tamil Nadu, Haryana, Delhi, Karnataka, Jharkhand, West Bengal and Andhra Pradesh.
Current share of the auto sector is about 58% of total forging production while the rest is with the non-auto sector. It is no wonder that the fortunes of Kay Jay Forging are, thus, closely linked with the growth of the auto industry.
Handwringing over the decline of manufacturing is not entirely new, nor is it unique to a state like Punjab. In a landlocked place everything has to be transported through roads and one does not have the advantage of a port. While the ready availability of has skilled labour and steel, which is the main raw material for the sector, are crucial advantages, the forging company has to overcome challenges.
The biggest disadvantage according to Kothari for Kay Jay today is the distance from the auto hubs of the country. In the automobile industry in the state it has players like SML Isuzu (formerly Swaraj Mazda), Punjab Tractors, ICML and in the north players like Escorts, Maruti Suzuki, and JCB, which are relatively closer. Original Equipment Manufacturers (OEMs) have also come up in areas like Pant Nagar, where Ashok Leyland and Hero Honda operate. Gujarat with its hub in Sanand is about 1000 km away.
Kay Jay, however, has bigger plans in the domestic market- something that looks to nullify the challenge posed by distance. The company setup a plant in Hosur ten years ago to meet the demands of one of its biggest customers- TVS Motors, which eventually grew to a 60,000 square feet facility. Buoyed by the success of the plant, the company is now building a second plant, pushing its manufacturing presence to over 100,000 square feet.
“The Hosur plant was started for crankshaft and connecting rods. Before this we were doing the forging for crankshaft for TVS Motors in Ludhiana, which were then sent to TVS for assembly. However, for the last few years we have started making these parts for a few of their models in Hosur and we hope to slowly and gradually do for all the models of TVS in Kay Jay Hosur. We are also doing the complete machining for Under Bracket. We are also doing a lot of components for TVS-BMW,” says Kothari.
The company is also setting up a new plant Ludhiana which will cater to demands from both domestic component and exports.
Kay Jay started exports in the year 2004 and for the overseas market it is strong in the Steering Yoke domain and is in fact the Tier 1 supplier to Bosch. “This means we also supply steering assemblies to companies to the likes of Mercedes, Audi, Mazda, Jaguar, and Renault-Nissan. We are also Tier II suppliers to companies like Rane, ZF Lenksysteme and NSK Steering Systems,”said Kothari.
Source – ACMA
In terms of countries, the auto component maker supplies to the US, France, China and Hungary. “European automakers are upbeat about Indian auto component maker. Our products are good in quality and priced well, which makes us very competitive. This means we have a lot of scope in exports,” says Kothari.
For cars, Kothari says it is doing Forged & Machined Steering Yoke. “Kay Jay was a small organization some 25 years ago, but a lot of modernization in machinery helped us grow in the last few years,” says Kothari.
While Kay Jay has been primarily engaged in the two wheeler segment of the market domestically, it has recently diversified supplying components for high-end luxury cars. “Domestic market for cars is good, but the two- wheeler market was so exciting for us domestically that we never looked at cars. Today, we are at a stage where we have diversified and are looking for new customers and the four wheeler industry is a good market to explore,” says Kothari. Being a supplier to Bosch is a huge shot in the arm for the company, a feat not many businesses have been able to achieve.
The company that forges 3000 tonnes of steel every month today employs 2400 people across its plants. Last fiscal the company clocked revenues of Rs 394 crore and Kothari says the company is growing at almost 20% this year.