Informist, Saturday, Jan. 18, 2025

By Krity Ambey and Rajesh Gajra

NEW DELHI – Auto component manufacturer Uno Minda Ltd. will focus on expanding its international business, particularly in the Association of Southeast Asian Nations, to compensate for the underwhelming demand from European markets, Executive Director and Group Chief Financial Officer Sunil Bohra said. As such, the company is set to expand its business in Indonesia with a new plant likely to be operational within six months, Bohra said.

"Currently, the plant is under construction and it should take around six months to start," Bohra told Informist in an interaction on the sidelines of Bharat Mobility Global Expo 2025. "Out of our total revenues, exports plus what we locally assemble in overseas are 12-13% of overall revenue. Of that, almost 6-7% is ASEAN." Apart from Indonesia, the Southeast Asian bloc includes Brunei, Cambodia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

With a capital expenditure of INR 2.10 billion, Uno Minda will set up the manufacturing facility in the lighting segment under its Indonesian subsidiary PT Minda ASEAN Automotive. The plant will aid the auto component company to manage the demand for long tail lamps for passenger vehicles, according to Bohra. Uno Minda has been a significant player in the Indonesian market since 2005 when it established its first manufacturing facility.

Uno Minda's international sales were under stress in the September quarter, the management had said at the conference call with analysts after Jul-Sept earnings. The company had reported a net profit of INR 2.45 billion, up 9%, in the September quarter. The company's revenue from operations was up 17% on year at INR 42.45 billion.

"The down trading in the European market that hampered exports of switching systems in the September quarter has continued in the ensuing months," Bohra said. "In terms of supporting exports, our focus is on expansion. So instead of going to new geographies, we are looking to expand where we are already present."

Indian merchandise exports have been grappling for over one year on account of sluggish demand from the European market and other developed economies. It grew by only 1.6% in Apr-Dec after contracting 3% in 2023-24 (Apr-Mar).

DOMESTIC DRAG

On the domestic front, the auto component company also witnessed the cascading effect of slower than anticipated automobile sale this year, Bohra said. Domestic vehicle sales grew in single digit, by 9.2%, to 19.43 million in Apr-Dec, according to the latest data from the Society of Indian Automobile Manufacturers.

"How do we make sure that the low volume does not significantly impact the business?" Bohra said. "We focus on kit-value, premiumisation, improving market share." Uno Minda aims to incorporate these to offset the domestic challenges, according to the CFO.

A part of the plan is Uno Minda's newly inaugurated plant in Farukhanagar, Gurugram, dedicated to the manufacturing of components for two-wheeler and three-wheeler electric vehicles. The company also has an existing manufacturing facility for fuel vehicles just a few miles away at Manesar.

Uno Minda has decided to move its Manesar operations to Farukhanagar. While the Farrukhnagar plant is aiding volume growth, the costs of maintaining the operations at the two plants outweigh the volume benefit a little, Bohra said. So, the company is shifting existing manufacturing plant from Manesar to Farrukhnagar, which should take place by Oct-Dec 2026.

Similarly, in its lighting segment, Uno Minda is utilising 85-90% of its capacity for 2-wheeler lighting parts and near-full capacity for 4-wheeler lighting parts. Bohra said to address this problem, the company is putting a new 4-wheeler lighting plant at Khed in Pune. This was expected to be commissioned in the December quarter but is now getting commissioned in phases.

"This (new) plant is much bigger, 4-5 times bigger, than a nearby lighting plant in Pune," Bohra said. It will provide for manufacturing of a wide range of lighting products. "The investments in setting up this plant are almost INR 5 billion over the next 4-5 years," according to Bohra.

Friday, shares of Uno Minda ended 1.3% down at INR 1,082.65 on the National Stock Exchange. End

US$1 = INR 86.61

Edited by Akul Nishant Akhoury

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