Set up in 1939, NHK Springs Co. Ltd. is a Japanese company with $5.7 billion annual turnover, 17,000 million yen market capitalisation and a workforce consisting of around 20,000 workers worldwide. It is engaged in the manufacture and sale of automobile-related products. NHK Springs aims to meet a variety of market needs. Its goal is to be a creative, challenge-driven company that offers new ideas to its customers. The company is always on the lookout for opportunities in today’s rapidly changing world. Perhaps this is why it has been able to expand globally, develop new business areas and explore leading-edge technologies. In the light of its corporate philosophy, it expanded its footprints in India in 1996 and started its commercial production in January 1999. Within a decade they established themselves as a formidable player in the automobile industry. In April 2013, they proudly announced their Rs. 300 crore investment in a new plant at Sri City, Andhra Pradesh. Team WCI had a close interaction with Mr. Toru Kadowaki, Managing Director, and Mr. Y.P. Sharma, Vice President, NHK Spring India Ltd. to get insights into this staggering investment.
Wire & Cable India: Tell us about the evolution of NHK Spring India Ltd.?
Toru Kadowaki: NHK Springs, which has operations in 10 countries and a total of 56 companies running worldwide, wanted to get a foothold in India as well. Initially, NHK Spring India came into existence through a joint venture between four companies in 1996: NHK Springs, Japan (58%), Allevard, Europe (24%), Jamna Auto, India (15%), and Metal One Corporation, Japan (3%). In 2003, two of these companies decided to part with JV and so we purchased their shares. Now, NHK Spring India has 99% of the share and Metal One Corporation holds 1% of the share in the JV. Our parent company operates in six divisions, namely suspension spring, seating, precision spring and components, industrial machinery and equipment and security technologies and solutions. In India, we are currently manufacturing suspension products for passenger vehicles and will enter the truck market soon. We make products for automobiles right form small cars to utility vehicles like SUVs and MUVs. Above all, we enjoy 100% of the share in utility vehicles. In the truck market, business has been initiated with companies such as Daimler, Ashok Leyland and Tata.
WCI: Tell us about your expansion plan as well ?
TK: We are going to invest Rs 300-crore in a plant that will come up in an area of 18 acres of land for manufacturing coil springs and stabiliser bars for the automobile industry. This is the second plant for the company in India after Manesar, Haryana. The reason behind building it at Sri City, Andhra Pradesh, is proper availability of labour and uninterrupted power supply in the region. We have been able to finalise 9 acres of land, and from 2014 onwards we will put up one line every year. The first phase entails an investment of Rs. 60 crores; then another Rs. 20 crores will be invested. Over a period, Rs. 80 crores will be invested in putting up two lines and then every year new lines will be installed costing around Rs. 40 crores. Sri City has emerged as a promising destination for Japanese companies to establish their manufacturing units, especially in the auto ancillary and components industry. The unit at Sri City employs a workforce of over 100 people, which would expand to 400 in the coming time.
Currently, as per our estimate, India is around ten years behind China. In 2009, China produced 10 million passenger vehicles; and we anticipate that by 2019-20 India should make it to 10 million passenger vehicles. Looking at the ongoing market scenario, I guess, it will take around 5 to 7 years to reach this figure.
WCI: Any new developments that you would like to share with us?
TK: Yes, we have planned to develop a steel product in India with the technical know-how from Diado Steel. This high-stress product is currently not available in India, and the technology behind it has not reached India because of exchange-rate fluctuations. NHK Japan decided to bring this technology to India and develop this product locally. Now this product has been developed by Mukand Steel, which means that the Indian automobile industry will not find it difficult to reduce its cost.
WCI: Procurement of raw material is one of the main activities of your business. Kindly highlight the challenges you have faced so far?
TK: We are basically procuring bright bars, which are wire rod products, from Usha Martin, JSW Group, Mukand Steel, Sun Flag and Upper India Steel. The product churned by the Indian wire industry has surface defects, whereas imported steel from Japan does not have any. The reason is that Indian steel makers do annealing even after drawing and grinding. Therefore, the Indian steel industry has to improve on two fronts, namely surface defects and avoidance of annealing, which can save the cost. Japanese steel makers do not anneal, as hardness is controlled in the mill itself. Indian steel maker cannot control the hardness in the mill–that is why they need to anneal.
WCI: How does NHK Springs carry out its R&D?
TK: NHK Springs uses cutting-edge experimental equipment to conduct basic technology research. Our new materials R&D department researches into a wide range of properties of metals and organic and inorganic materials. Our process technology department researches into advanced technology for bonding different materials and precision machining. The company’s creative and challenge-driven R&D department is currently developing next-generation technologies. Two principal themes underpin NHK Spring’s basic R&D activities: The first entails efforts to ensure automotive safety and environmental protection. The company delivers components that incorporate safety features to prevent automobile collision, to protect the pedestrian and to reduce passenger injury. In the field of environmental protection, NHK Springs develops energy-efficient engine parts and olefin foam mold components offering recycle-efficiency. The second theme encompasses advanced information and communications. Driven by precision molding and machining technology, NHK Springs is also pursuing development of ceramic precision components. On the aforesaid lines, NHK Japan has decided to put up an R&D facility in India. We have already employed a Japanese person from our parent company for this purpose. Our first R&D centre was put up in Japan; the second was developed in USA; and the third would be established in India soon.
WCI: Share your thoughts on the Indian steel and automobile industry ?
TK: The steel industry in India works in a seasonal manner, and price fluctuation is closely related to it; if business is good, prices are high and if it is down, prices are low. In addition, the raw material used by them for producing steel is of different types, such as sponge iron and steel scrap; but the prices of the finished products are the same. Therefore, price stabilisation has to be there in order to keep the industry rolling.
The automotive industry in India is very sensitive–a little increase in fuel prices or interest rates drastically affects the sale of cars. Nevertheless, the best part is that 65% of the population in India is young and the number of cars per thousand people is very low. So, there is a big gap to be filled. For instance, in today’s Indian IT industry, the number of cars per thousand people is 340, whereas in India as a whole the number of cars per thousand people is 7 to 9. In China, it is around 12-13 per thousand people. In the coming years, I believe, the number of passenger vehicles in India will rise exponentially.
