Madras Engineering – Raising the bar to the next level

Madras Engineering Industries Pvt. Ltd. (MEI), traditionally known as Slack Adjuster Company, has diversified its product portfolio to MEI-Ananthakrishnaninclude additional brake system parts and has also entered the clutch actuation system parts market. With four decades of proven experience in the CV industry, the company is raising its bar to the next level to retain its No.1 position and also expanding its reach in the replacement market segment in a big way.

With three independent manufacturing units, MEI has an installed annual capacity to produce 2.5 million automatic slack adjusters and 1.5 million manual slack adjusters. With more than 600 varieties of automatic slack adjusters and 300 variants in manual types, it is the market leader in the country and a dominant player at the global level. Having already obtained the most preferred supplier status, it has managed to gain a 70 per cent business share with domestic OEMs on an overall basis.

Export performance

On the export front, MEI has the OE status with Kamaz (Russia), Tata Daewoo (South Korea), IVECO (Brazil) and a few truck and trailer axle manufacturers. It has dominant presence in the replacement market segment in Europe, the US and South American markets. The contribution of export earnings to total revenue, now at 30-40 per cent, is steadily growing. With a special thrust on exports, MEI has set an ambitious plan to take the current exports sales to the next level with various new products in the pipeline and with new markets identified.

During a recent one-to-one discussion with Mr. K.R. Ananthakrishnan, General Manger (Marketing), MEI, a detailed review of how the company started, where it stands now and its future was given. The success story of MEI started with the introduction of automatic slack adjuster in commercial vehicles in the European market in 2000 and in India in 2007. Since then, there has been no looking back. The CAGR of MEI is in the region of 20 per cent over the last five years.

New products

MEI had showcased a few new products at the last Auto Expo to claim its stand towards shifting from a single product company to multi products. It has already introduced 90 Dia and 70 Dia clutch boosters for commercial vehicles, and the third variety, 102 Dia, is due for launch in February. The second product launched is the brake lining wear sensor, a technology product which has already started being fitted on all select Tata Motors bus models. Fitment trials are under way with other OEMs. Considering the in-built safety feature of the product, MEI expects wear sensors to become a mandatory fitment soon in all passenger/bus models as well as hazardous goods carriers.

The third product already launched is Ty 24 brake chamber for trailer axles. MEI is already supplying Ty 24 brake chamber to Jost Gigant for its Indian operation, and talks are in an advanced stage with other leading trailer axle manufacturers in the country.

On the aftermarket business, Mr. Ananthakrishnan said the unprecedented business environment is creating new challenges for companies across the world. Shrinking sales and profit margins force companies to look for alternate ways for increasing their bottomline. As a consequence, the aftermarket is becoming an important source of revenue. The strategy works effectively when parts, services and sales are completely aligned and interwoven. In view of the current downtrend in the OEM segment, MEI has stated concentrating more on the aftermarket.

With 25 dedicated marketing people supported by 70-odd parts distribution outlets across the country, MEI is making major moves in the replacement segment. The company has become a household name in the garage segment. Along with the present products already being supplied, MEI is also planning to introduce a number of new parts exclusively for the aftermarket related to brakes and brake sub-system aggregates. Another segment under close watch is the trailer business, which in the recent past has showed some signs of recovery.

No aftermarket strategy can work without adequate planning and involvement of the complete product supply chain. Companies need to build processes and systems that help their vendors plan and stock the parts required. MEI is fully geared to meet the challenges to raise the bar to the next level.

Recession in auto industry is not something new. It is quite normal that during the recessionary phase, every organization would resort to cost-cutting to manage their finances. MEI took it as a challenge and went for sizeable investments for setting up a greenfield state-of-the-art ferrous foundry at Pillaipakkam on the outskirts of Chennai at an installed capacity of 12,000 MT/yr in phase I. It has further added a new plant with an annual capacity of 12,000 MT/yr in phase II. The new facility has been set up to partly cater to the in-house requirement of castings and the rest of the capacity is offered to outside customers. The foundry business of MEI will operate as a separate profit centre.

Before concluding the discussion, Mr. Ananthakrishnan explained the strength of his organization, and the nature of the technical team and employees of the company. MEI has a mix of experienced people and youths in all departments. The top management involvement in all key matters and focus areas, with an excellent R&D set-up equipped with all in-house testing facilities.

The MEI vision is to take a big leap forward and to achieve a turnover of Rs. 700 crores by 2017. To make it happen, the company has set clear objectives under its action plan.