Highest-ever turnover achieved in FY19
Back in 1980, a company named Automotive Castings Ltd. came into existence as the result of a joint venture between Ashok Leyland and the Tamil Nadu Industrial Development Corporation to support Ashok Leyland’s castings requirements. A year later, it was renamed as Automotive Coaches and Components Ltd. (ACCL) and began manufacturing ‘on-chassis’ application products, catering mainly to Ashok Leyland’s requirements. Nearly four decades on, ACCL has established itself as a leading and one of the most reputed manufacturers of truck applications, viz., “on-chassis” and “after-chassis” in the country.
In its 38-year history, FY19 was a special year for ACCL, one in which it has recorded its highest-ever turnover since inception. We spoke to the man at the helm of ACCL, Mr. J. K. Sudharsan, Managing Director, to know more about his company’s record performance, plans to keep getting better every year, adapting to changing market dynamics and lots more.
Manufacturing prowess
With an annual turnover of $20 million, ACCL has been recognised as a global logistics solutions provider, through innovating high-quality products and induction of latest technology. Its manufacturing facilities are well equipped with cutting-edge infrastructure, which include machine shop, press shop, paint booths and spot wielding lines. After nearly four decades, one of ACCL’s major strengths is its ability to deliver a portfolio of products which addresses the exact needs of the end users.
ACCL has established itself as a pioneer in tippers, trailers, couplers, sub-frame kits, containers, cabins, front-end structures, defence products and a number of other products and applications. Its mother plant is located at Gummudipoondi near Chennai while it has a second facility at Pondicherry. It currently produces close to 30 tippers a day while its peak trailer capacity stands at 20 units a month.
The company has grown by leaps and bounds in the last two years with market demand shooting up significantly, says Mr. Sudharsan: “From FY16-17 to FY18-19, our production has grown by about 172 per cent. We have found plenty of orders in the market for rigid bodies and other applications from marquee customers, which has helped us achieve our highest-ever turnover of Rs. 131 crores in FY19. We sold 9,400 units of various applications during the financial year of which 3,200 were tippers, 6,000 fifth wheel couplers and 200 were trailers. We hope to continue our good performance in the current year and expect a growth of around 100 per cent this fiscal.”
Focus on Design and Quality
Apart from its wide range of standard products, ACCL produces reefer containers, fire trucks, car carriers, cattle & livestock carriers and many other special applications, all of which are available in a number of interesting variants for export markets too. “We give a lot of emphasis on the design aspect of our products as we feel that is one area where we can add value to the OEMs and differentiate ourselves from others in the market. We are a ‘facilities-based’ brand and manufacturing is one of our major strengths. Our customers often visit our factory and like what they see. We would like to continue our ‘facilities-based’ approach rather than the usual ‘marketing-based’ model”, he shares.
While design is a very important aspect of manufacturing, sourcing the right aggregates carries equal importance which is why ACCL is very particular about the suppliers it works with. The MD explains: “There has been a huge improvement in the quality of aggregates and the materials that are used in our products. We use only with the best of brands when it comes to key aggregates such as axles, suspension kits, tipping gears, landing gears, etc., and ensure the quality of steel we procure is also top-notch. We maintain a very good relationship with all our suppliers and thanks to the fast-improving supply chain, we have many options to choose from.”
Balanced approach
ACCL is a key supplier to all major CV OEMs in the country, both directly and through their dealerships, and also boasts of a very strong base of retail customers across the country. In the South, a major share of its business comes from the OE space, primarily driven by Ashok Leyland, while the open market is the major contributor to its sales in other regions.
The company is stepping up its ties with OEMs so that end customers can benefit from fully-built solutions. “We are stepping up our focus on catering to the OEMs so that customers get a one-stop solution from purchase throughout the warranty period. We are looking at adding a new production line for OEM requirements and are expanding our facility for tipper production as well to meet the growing demand from the open market”, states Mr. Sudharsan.
Having traditionally catered predominantly to the medium and heavy-duty segments, ACCL has seen a sharp rise in orders for applications on vehicles like Tata Ace and Ashok Leyland’s Boss and Guru in the open market. Considering the huge potential offered by LCVs and ICVs, the company is mulling investing in a facility dedicated to customers in these segments.
ACCL also works closely with vehicle dealerships, which forms an important stream of business for the company. Thanks primarily to its incentive programs for dealers, ACCL has had very good success with Mahindra dealers in South India and has also bagged good orders from Daimler dealers too.
Dynamic market scenario
The last decade has probably been one of the most dynamic ones for the Indian commercial vehicle industry, with a number of changes transforming the sector into a more quality-conscious and safety-adherent one. The Government has played its part by creating a conducive environment with the implementation of GST, which has made it easier for larger and more organised players like ACCL to do business, and hastened change with other regulatory changes.
“We see the market getting more organized, thanks mainly to GST. We are getting a number of refurbishment works where tippers built on the roadside come to us after being used for four to five years. Until a few years back, the refurbishment work would have also been done at the roadside sheds”, he says.
Another factor that is driving quality is the changing mindset of the end customers where the younger generation is making a big difference. “With the next generation entering the field in many logistics & transport businesses, the attitude of these customers has changed; they have become smarter in terms of what they want to buy. We are dealing with a lot of businesses run by third generation youngsters who have been around the world; they demand that the products are of world-class quality and accept no compromise whatsoever”, he adds.
On the product side, ACCL’s trailer business has witnessed a change in demand in recent times. The MD shares: “Historically, there was volume play in the standardised trailer space; then we had the high margin, low volume custom trailer market; now we see the standardised trailers tapering off, while there is tremendous growth in the customized trailer space”.
This shift in demand from volume products to customized products has come in as a big boost for ACCL, given its rich skill sets in and penchant for product design and engineering.
According to Mr. Sudharsan, there has also been a shift in demand from the traditionally popular rigid bodies to the increasingly popular articulated bodies as seen from a steady rise in its sales of the latter version.
Expanding presence
Even though ACCL has its roots and manufacturing facilities in South India, the company has its strong presence in the form of sales & service points across the country. One of ACCL’s main goals for the near future is to further expand its presence and ensure its brand becomes more visible in non-South markets. “Most of our investment priorities for the future include an element of geographical expansion; most of our discussions with our OEM customers revolve around the idea of our commitment to open another plant in close proximity to their production site”, reveals the MD.
ACCL has sales offices all over India with main offices at Delhi for North India and Raipur for East India. The company is exploring the possibility of aligning with dealers, especially in North-West, by giving them ready-to-assemble kits for quick delivery to customers. With a long-term plan in place, ACCL hopes to open up its business further in the north with its regional base camp as Delhi, which is also the main centre for its Defence-related operations.
With its trailers, tippers and other applications running across the length and breadth of the country, ACCL has service touch-points across Raipur, Bilaspur and Kolkata in the Eastern region, apart from touch-points across Gujarat, Pune and Delhi. The company has created a service network that is strong and agile enough to ensure its customers’ vehicles are attended to within 36 hours and put back on road in a matter of a few hours anywhere in the country.
“We guarantee our customers that our service engineers will reach their vehicle within 36 hours; we are delivering on the promise which is helping us get repeat orders”, signs off Mr. Sudharsan.