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VI Foundry Conclave 1-2 March 2013 Customer Expectations Ashok Rao Automotive Axles Ltd Mysore. Established: April 21, 1981 Equity Share: Meritor 35% Kalyani 35% Public: 29% Land Size: 202,343.5 Sqm Current Location: Mysore, India Total Employees: 2000+. - PowerPoint PPT Presentation
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VI Foundry Conclave1-2 March 2013
Customer Expectations
Ashok RaoAutomotive Axles Ltd
Mysore
2
• Established: April 21, 1981
• Equity Share: Meritor 35%
Kalyani 35%Public: 29%
• Land Size: 202,343.5 Sqm• Current Location: Mysore, India
• Total Employees: 2000+
Automotive Axles LimitedBSE / NSE Ticker Symbol: AUTOAXLES
3
N
Current
Future
FootprintPANTNAGAR & BHUJ• Final Axle assembly plant for AL & AMW• Brake component manufacturing and assy
JAMSHEDPUR & LUCKNOW• Brake component mfg and assembly
PITHAMPUR• Axle manufacturing unit• Brake component manufacturing & assy
MYSORE• Export component manuf• Axle manufacturing • Drum & Disc Brake Assembly
NOIDA• Trailer & Tag Axle manufacturing
PUNE• Warehouse for aftermarket
BANGALORE & CHENNAI• Technical center
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Major Customers - Domestic
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India Product Portfolio – CurrentMHCV Drive
AxlesOff-Highway &
MilitaryNon-Drive
AxlesBrakes
Single Reduction Solo & Tandem Axles
Twin-Speed Reduction
Hub-Reduction
Exports
Drum brake for M&HCV application
Disc Brake for Truck & Coach application
Axle for Truck mounted cranes
6x6 & 8x8 Military Axles
Front Axle
Tag Axle
Trailer Axle
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India Product Portfolio – Future AdditionsLCV Axles Military SuspensionsOff-Highway
MS02 for sub 2T vehicles
MS04 for 6T vehicles
MS06 for 8-10T vehicles
High Mobility Independent
Suspension (HMIS)
Motor Grader Axle
Compactor Axle
Loader Axle
Bogie Suspension
Slipper Suspension
Lift Device for Tag / Trailer Axle
Exports
Front Drive Steer Axle
7
India Economic Overview
Source: RBI / MOSPI / SIAM
GDP Growth
9.0
6.98.3 8.4
6.55.5
2008 2009 2010 2011 2012 2013Industrial Production Growth
15.6
5.38.2
2.92.5 3.4
2008 2009 2010 2011 2012 2013Inflation
4.83.6
9.98.9
7.58.0
2008 2009 2010 2011 2012 2013M&HCV Vehicle Production ('000)
293 317360 352
159
271
2008 2009 2010 2011 2012 2013
GDP• Robust growth for 10-12 years till 2008• 2012 affected by global headwinds, de-growth in exports• 2013 appears to be bottoming-out
Industrial Production• Robust growth till 2008 post economic liberalization in ‘91• Recovery phase between 2010-12 after global recession• 2013 will see minor improvement over 2012
Inflation• Traditionally have been at 7-8 percent levels• High inflation recorded in 2011 & 12• 2013 levels to stablize at 7 – 7.5 per cent levels
M&HCV Industry• Growth levels closely mirrors IIP growth• Weak demand in 2013 – negative sentiments in market• Should grow at 7-8 per cent levels from 2014 onwards
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Commercial Vehicle SalesMHCV Sales Trend LCV Domestic Sales Trend (‘000)
Competition Proliferation Vehicle Model Proliferation
0
200
400
600
800
1000
1200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LCV Sales expected to cross 1 Mn mark by 2017
0
100
200
300
400
500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
MHCV Total Sales expected to cross 500K by 2017
2006 2011 2017
MHCV 5 8 ~ 13-15
LCV 7 9 ~16-17
Approximately 25-30 new vehicle models are released every year in MHCV segment
Approximately 8-10 new models are released every year in LCV segment
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CV Market Key Changes …
• Volume comes with Variety
• Uncertainty is certain – Forecast passé?
• Competition at Customer & within Suppliers will drive
• Quality
• Product Performance
• Time to Market
• Price
• Product Liability
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Part Quality
•ConsistencyMetallurgy / Dimension
•Reduced Fettling•Consistency
Fettling•Improved Finish / Consistency•Eliminate Sec. Oprns - Spot facing Surface
Finish
•Salt Spray : 500 HrsSurface Protection
Raw Casting ppm Domestic : 20000 vs Global : < 5000
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Part Delivered Quality
One Quality : Export = DomesticTypical Delivery Condition Better Delivery Condition
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Axle Performance
• Product Abuse – No Change• Domestic CV Performance expectation ~ Global Standards
• Good Engineering & Manufacturing to closer tolerances Key to success
Metric Earlier Current Expectation
Global
Warranty 1 yr or 100,000 Kms
3 yrs or 300,000 Kms
500,000 Kms
Reliability B10 Life
100,000 Kms 400,000 Kms 1 Million Kms
Oil Change Interval
40,000 Kms 200,000 Kms 250,000 Kms
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Time to Market
• Concept to Customer continuously shrinking from couple of years to ~1 to 1.5 years
• End to End Design / Validation (Product & Process) on Digital Platforms
• Early involvement of Supply Chain thru these Platforms – requiring good Engineering capability – Product / Process for upfront participation
• Program Management within the Foundry Organization to ensure on-time – FTR delivery of new programs
• Follow & strictly adhere APQP
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Recent Experiences of Complex Castings
• Landed Casting cost of Imported << Domestic• Quality Level of Imported >> Domestic• Imported Casting Wt ~ Design Wt• Local Casting Wt ~ 1.2x of Design Wt.
Why ?• Future Domestic products will use complex Castings
Are we Ready ?
Casting Imported from France Equivalent Domestic Casting
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Pricing
• Converted from Castings to Forgings because of poor Delivery & Quality
• Apart from per pc savings addn savings from avoidance of COPQ
Challenge : Make Castings always a compelling, competitive & preferred Option
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• Focus on Fundamentals … • Invest in Advanced Technologies ….• Support Innovations ….• Support Skill Upgradation / Continuous Trg …• Transform Foundries into a preferred destination
for work at all levels
Other Expectations
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To Conclude
Use Lean period to prepare to be in better shape for future
We need each other to be successful.
Together we can do it !
All the Best !