ACGL investing in Buses Big Time!

ACGL, in which TATA Motors have vested interests is increasing its annual capacity to 10,000 bus bodies by 2012. ACGL has two plants in Goa which already have a combined capacity to make 5000 bus bodies per annum.

Buses in India are primarily a government business with major consumption with the vaious municipalities. The government tender is generally contested by the OEM’s and big bus body builders and then based on who’s got the order, their vendors get to make the bodies. ACGL being the largest vendor of bus bodies for TATA Motors gets a fairly large size of this market.

Strategic Positioning with TATA Motors

As expected, ACGL and TATA Motors it seems are working hand in glove on buses. The expansion for ACGL is aimed at serving the 9 tonne plus segment. To create this capacity, ACGL will shift its sheet metal division from its second Goa plant to Dharwad. In this way, TATA Motors plant at Dharwad which will produce sub 9 tonne buses will be served by ACGL’s sheet metal division as well as ACGL gets land and building for its expansion plans.

2007-08 Turnover for ACGL:
Rs 250 Crore - Bus Division
Rs. 80 Crore - Sheet Metal Division

Kailash Vahan Rolfo Joint Venture

Kailash Vahan has also signed JV agreement with Rolfo S.p.A. of Italy to manufacture car transport solutions in India.
With the explosion in growth of passenger vehicles in India, there is a need for better technology solutions to transport cars from OEM plants to various dealers across India. The current solutions are simple trailers carrying 8-10 cars on a 22 mt length. Incidentally, in India double decked tractor trailer lengths are permitted upto 22 mt and rigid trailer lengths are permitted upto 12 mt. Hence these trailers can carry small cars upto 10 in numbers and others upto 6-8 in numbers depending upon the size of the car.

Just to give you an indication, here's the length of smallest cars in India:

Specs	Hyundai Santro Xing GL	Maruti Suzuki Alto LX - BS III	Tata Indica V2 DLE-BS III	Chevrolet Spark 1.0
Overall Length (mm)	3565	3495	3675	3495

But with the advent of Tata Nano, the game is set to change again. The world's cheapest car will want a cheap and efficient transport solution and it will be a big number game. The Tata's would want to carry atleast 12-14 Nano's per trip to cut the costs. Hence a more complex Hydraulic system based solution will be required, which uses the space of the trailer efficiently and packs in more cars per trip.

The Kailash Rolfo JV will try and produce a solution using Italian technology but fit for Indian conditions. Customers will want extra cars without increasing the cost of the trailer. It will be a very difficult job for the engineers and designers of Kailash Rolfo to match customer expectations on both the fronts - 'cars per trip' and 'price'. They will have to find a solution mid-way.

Kailash Vahan ShinMaywa sign JV

Kailash Vahan is one of India's largest truck and bus body builder having facilities in Pune and Bangalore. Our customers include Tata Motors, Ashok Leyland, Eicher among others. Kailash Vahan specializes in Tipper bodies, Cargo or Load bodies, Waste management solutions like Garbage Compactors, Bins, Garbage Tippers etc.

ShinMaywa is Japan's largest truck body builder. They also have interests in Industrial Machinery, Aircraft etc.

The Joint Venture will primarily serve interests of Japanese truck manufacturers in India like Hino, Isuzu, Nissan. The JV will make tippers to start with and then as the relationship strengthens and demand of other specialized truck body increases, the JV may also enter other segments in the truck body building industry.

From a strategic perspective the JV will serve interests of both Kailash and ShinMaywa well and it will be in the interest of both the companies to take the JV a long way and pool their energies and resources to make it a success.

As the body building industry gets more organized and with more foreign OEMs entering India, it is inevitable that technology and quality will become important factors to both - the OEMs and the end Customer. From Kailash's perspective, this JV can help them with ShinMaywa's technology (e.g. Tentsuki hydraulics) and to improve their production processes (do things the Japanese way).

From ShinMaywa's perspective, they have a very experienced Indian partner who knows industry practices in India, who knows the customers and has a well established presence pan India. They will also have a ready manufacturing base to start serving Japanese OEMs from day one without even having a factory. This is also very important considering the downturn we are in! The JV can be started at a very low cost and pass the benefit to the customer.