Sona Group Business Report FY ended Mar. 2015
Recent Years
Financial Overview
Sona Koyo Steering Systems Limited
-Sona Koyo Steering Systems' total revenue for the fiscal year ended March 31, 2015 increased by 1.7% from the previous fiscal year to INR 15,578.4 million. The increase in total revenue was primarily due to corresponding growth in India's passenger vehicle market.
-Consolidated sales for the fiscal year ended March 2014 were INR 15,320.2 million, up 4.3% year-on-year. Sales continued to increase from the previous year's result despite sluggish sales of passenger car components, which decreased 6 percent year-on-year. Meanwhile, exports grew by 55 percent year-on-year thanks to strong sales of the company's original Electric Power Assist Modules (EPAMs) for farm vehicles and other equipment.
Business Policy
Sona Koyo Steering Systems Limited
-In September 2013, Sona Koyo Steering Systems suggested that they would increase exports, primarily to the U.S. This was a response to both decreasing domestic demand in India, as well as the depreciation of the Indian rupee. The decrease in demand in the Indian automotive market has affected the automotive components industry, as shown in Sona Koyo Steering Systems' capacity utilization, which has ranged between 70-75%.
Recent Developments in India
Sona Koyo Steering Systems Limited
-During the fiscal year ended March 31, 2013, Sona Koyo Steering Systems' two new projects towards backwards integration into aluminum die-casting and in-sourcing went into commercial production. The aluminum die-casting facility provided another way for the company to add new customer segments. The in-sourcing program brought back processes that were outsourced earlier to improve quality, reduce cost and increase in-house value addition.
-Phase-4 involving the localization of Column type Electric Power Steering (CEPS) at the Dharuhera facility is expected to be completed by the first half of the FY ending March 31, 2014. Components of the CEPS system that are being localized include the input shaft, torsion bar, and retainer parts. The emphasis on localization has helped Sona Koyo Steering Systems to reduce its import percentage of total raw material costs to 19% in the FY ended March 31, 2013. This percentage is expected to decrease after the completion of Phase-4 of CEPS localization.
-Sona Koyo Steering Systems Limited has started relocation of specific manufacturing operations in order to improve manufacturing efficiency in the FY ended March 31, 2013. Manufacturing operations in Gurgaon are being moved to three plants in Dharuhera, one in Sanand, one in Gujarat, and one in Chennai. The relocation process is expected to take around two years to complete.
Acquisition
Sona Koyo Steering Systems Limited
-During the FY ended March 31, 2013, Sona Koyo Steering Systems Limited acquired the remaining 30.08% stake of Sona Stampings Limited (SSL) from Arjan Auto Private Limited, making SSL a wholly-owned subsidiary of Sona Koyo Steering Systems. SSL had revenue of INR 112 million in the FY ended March 31, 2013.
Sona BLW Prazisionsschmiede GmbH
-In January 2008, the Group acquired the ThyssenKrupp Prazisionsschmiede GmbH from ThyssenKrupp Technologies AG. ThyssenKrupp Prazisionsschmiede operates under the name Sona BLW Prazisionsschmiede GmbH. Precision forged gears and axle components are manufactured at three production facilities in Germany and one in North America.
Divestitures
-In 2012, ZF Friedrichshafen AG acquired the Group's entire stake in Sona Somic Lemforder Components Limited. Sona Somic was a joint venture between Japan-based Somic Ishikawa and another joint venture company between the Group and ZF. After the transaction, Somic Ishikawa and ZF renamed the joint venture to Somic ZF Components Limited.
-In 2011, American Axle & Manufacturing Holdings, Inc. (AAM) announced that it has assumed full ownership of the AAM Sona Axle Private Limited Joint Venture (AAM Sona Axle) in India. AAM Sona Axle, previously a joint venture between AAM and Sona Koyo Steering Systems Ltd. manufactures and sells light truck, passenger car and SUV axle assemblies for the India market. (From a press release on January 7, 2011)
Joint ventures
Sona Koyo Steering Systems Limited
-In 2007, Sona Koyo formed a joint venture with American Axle & Manufacturing Holdings, Inc. (AAM). The new company, AAM Sona Axle Private Limited (AAM Sona Axle), manufactured and sold light truck, passenger car, and SUV axle assemblies for the India market. The corporate headquarters of AAM Sona Axle was located in Pune, India, and a new manufacturing facility was constructed in northern India. The facility was expected to launch in 2008 with the production of light vehicle axles for Tata motors. (From a press release on October 30, 2007)
-In July 2007, Sona Koyo established a new joint venture, JTEKT Sona Automotive India Ltd. (JSAI), in Haryana, India for the manufacture of electric power steering in partnership with JTEKT. Manufacturing operations at JSAI were scheduled to start in January 2010. The Company owns 49% of the joint venture, and JTEKT owns 51%. The total amount of investment in JSAI was approximately JPY 3.5 billion, and sales were projected to reach approximately JPY 9 billion in 2010. (From a press release on October 22, 2007)
R&D Activities
Sona Koyo Steering Systems Limited
-Sona Koyo Steering Systems had an R&D expenditure of INR 24.0 million in the fiscal year ended March 31, 2015. The company researched advanced driver assistance systems and steering systems for automated vehicles, origins of oil degradation in hydraulic power steering systems, and processes to die cast a specific aluminum alloy.
-Sona Koyo Steering Systems' R&D expenditure in the fiscal year ended March 31, 2014 was INR 30.7 million.
Product Development
Sona Koyo Steering Systems Limited
-In 2010, the Company has developed the EPAM (Electronic Power Assist Module) for off highway vehicle applications, which uses less fuel and costs about 20 percent cheaper than existing electronic power steering systems. Facilities to manufacture EPAM were set up at the Dharuhera plant and the Company had prepared for mass production in the fiscal year ending March 31, 2012.
Capital Expenditure
Sona Koyo Steering Systems Limited
-In the fiscal year ended March 31, 2015, Sona Koyo Steering Systems had capital expenditures of INR 650 million. The capital expenditure was used primarily on projects focusing on backwards integration, the reduction of production cycle times, and the increase of manual gear production capacity.
-In the fiscal year ended March 31, 2014, Sona Koyo Steering Systems Limited invested INR 855 million towards capital expenditure.
-In the fiscal year ended March 31, 2013, the Sona Koyo Steering Systems incurred a capex of INR 815 million towards setting up a new facility at Dharuhera to manufacture steering systems and establishing an aluminum die-casting facility at Dharuhera.