In this edition of Bazaar Talk, we hit the streets of Mumbai, the financial capital of India. For decades, Mumbai has been an important entry/exit point for the Indian auto industry. The automotive scene in the city is synonymous with world-renowned brands and revs up more than just heart beats.
If in Mumbai and looking for auto components or accessories, Opera House is the name to remember. The area is packed with dealers and distributors showcasing the latest and best global brands and also the cheaper local alternatives. On a busy Monday morning, we got an opportunity to interact with some of the established players in the field – Sanjeev Motors, Dharamtar, Century Automobiles, Pratap Singh & Sons, and Sukshanti Auto Products Pvt. Ltd.
Our first stop was at Sanjeev Motors, the specialist in engine parts. Tucked inside one of the oldest buildings in the locality, it is one of the reputed names in the market for piston and piston rings. For more than 40 years the company has been associated with Federal Mogul for its engine parts.
With more than five decades of expertise, Sanjeev Motors has carved a niche for itself by earning many accolades in the automotive industry. Mr. Bharat Chugh, Owner, Sanjeev Motors, said: “Our company was started 50 years ago, and since inception we have been focusing only on engine-related spare parts. We offer engine components for trucks, tractors and passenger cars, but refrain from dealing with two-wheelers. We share a healthy relationship with Federal Mogul and have a good market share in Maharashtra for its Goetze products.”
Talking about the business performance, Mr. Chugh commented: “Our sales figures have grown by more than 50% in the last decade mainly due to cut-throat competition and to appointment of more dealers for the same product. Of late, the aftermarket business is slowly picking up, and we hope for a good 2015.”
We proceeded next to Dharamtar Motors, one of the oldest distributors in the Opera House auto market. The company was started in the pre-Independence days to cater to the growing demands in the aftermarket industry. “We specialize in engine components for the LCV and HCV segments, and also offer critical electrical and electronic components wherever required. We have been associated with Federal Mogul since 1993 and are doing a sizable business in the western region,” said Mr. Dhaval Shah of Dharamtar Motors.
Dharamtar Motor Service operates through three locations in Mumbai and deals with 8-10 global auto brands. “We have been receiving very good support from Federal Mogul with growing customer interaction in the last few years. Out of our total turnover, nearly 40-45 per cent comes from Federal Mogul motorparts. We have been receiving very good support from the company and the demand from the end user for its products is consistently expanding. Business is slow but steady, and we are growing at a rate of 10-15 per cent year-on-year. With the new government in place, we are very positive that the business will only get better in the years to come.”
Then, for our next interaction, we visited Century Automobile to meet Mr. Maherdas J. Patel. It was started over five decades ago as a trading company. From a humble beginning, the company has grown multifold and has established itself as a prominent player in the aftermarket trade. “We have been associated with Federal Mogul since our company inception. At Century, we sell their products like Goetze pistons & rings, Champion spark plugs and Glyco bearings. There has been a constant increase of 5 to 8 per cent in sales volumes for these items every year. Last year we saw a rise in demand for Goetze pistons and rings, and hope that this trend will continue in all other segments,” observed Mr. Patel.
Asked about the reasons for the increase in demand for Federal Mogul products in the market, Mr. Patel said: “Federal Mogul as a company is evolving. Greater professionalism, adoption of better practices and renewed focus on customer satisfaction are some of the major factors for the growing demand for products in the emerging scenario. In addition, with the Indian market consolidating, people generally prefer a trusted quality product rather than its cheaper alternative.”
Talking about the current market scenario, he observed: “The market is extremely volatile. There is no rotation happening. We have been in this business for 50 years and have seen adverse conditions in the commercial vehicle space. With improved technology and vehicles requiring lesser maintenance, the aftermarket business for engine parts doesn’t look so promising in the long term. Small players and middlemen won’t be able to sustain; business is getting more organized. I feel value addition is going to be the key to survival.”
Our next stop was Pratap Singh & Sons, which was set up in 1951, and has been operating as a distinguished player in the automobile spares segment. We met Mr. Sartaj Singh Chadha, a third generation entrepreneur, who is closely involved in business for the past 20 years. With distribution centres at 40 locations across India and with a network of facilitating offices in the Middle East and Sri Lanka, the firm is involved in trading of automobile components by strictly adhering to the highest quality standards.
With distribution rights from 30 global brands, Pratap Singh & Sons is one of the best aftermarket outlets in Maharashtra and the surrounding regions for spareparts for M&HCVs, LCVs, off-highway vehicles, passenger cars, SUVs and tractors. The company whose topline grew by nearly 17 per cent in 2014 is positive about achieving double-digit growth this year.
“For the last 10 years, Pratap Singh & Sons has been associated with Federal Mogul for their Champion brand of spark plugs. We were doing good business during the initial years, but the sales volume started declining in the passenger car segment with the growing use of unleaded petrol. Irrespective of the fall in sales, we continue maintaining our strong relationship with Federal Mogul brand and would look at working with more of their products in the future”, added Mr. Chadha.
We finally met Mr. Ajay Grover of Sukshanti Auto Products Pvt. Ltd., who shared his views on the current market scenario. “With increasing availability of OEM spares, aftermarket business is taking its toll. But, with vehicle sales picking up, we hope to grow at a steady pace,” stressed Mr. Grover.
Sukshanti Auto has a long and fruitful association with Federal Mogul. The distributor, along with two more subsidiaries, is a prominent dealer of all Federal Mogul products, predominantly catering to the two- and three-wheeler segments. All the three companies put together framed a top-line of Rs. 40 crores with the contribution of Federal Mogul products being close to 20 per cent of the overall figure.
“Our relationship with Federal Mogul has always been excellent, irrespective of the current market condition. And with the new top-level management at Federal Mogul India, they understand the ground reality better and are offering us amicable solutions,” said Mr. Grover.
A number of points emerged after a tiring yet exciting day in the market, with discussions covering a range of issues. With newer technology assuring better performance, the Indian aftermarket industry is maturing at a rapid pace, and it’s just a matter of time before the smaller players get phased out due to insufficient margins.
From the Mumbai market standpoint, another noticeable aspect is that both distributors and customers of Federal Mogul are extremely delighted with the approach of the company’s Indian team and are keen on extending their cordial relationship further in the years to come.