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By Sharad P Matade| Jun 22, 2021

Lumax Bets High On Electronics, Resumes Investments

Lumax, a leading manufacturer and supplier of automotive components and systems in India, is poised to bank on the opportunities being created with its partners in its wide product portfolio from automotive lighting to its new business of electronics, communications and EV powertrain products. The company management has given a node for the investment which will be used to set up an electronics plant at Bawal in Haryana and augment capacity at the Sanand plant in Gujarat.

In an interview, Vineet Sahni, Lumax Group CEO says the group is bullish on all its business ventures, especially electronics and on-board antennas and other vehicle communication products. It is also eyeing to heighten its relatively new businesses under Lumax Auto. However, Lumax intends to go slow on EVs for time being. Excerpts:

 

After facing a turbulent time like any other company last year, Lumax Group decided to resume its investments in the current fiscal year, which it had halted in last fiscal due to uncertainties. “We had put almost all the investments on hold except the bare essentials. I think we did pretty well. However, in the current year, we have given the go-ahead to all the investments on anticipation of the control on the Covid situation,” said group chief executive Vineet Sahni.

Lumax-DK Jain Group is investing INR 250 crore in Capex this year to set up an electronics plant at Bawal in Haryana and augment capacity at the Sanand plant in Gujarat.

Today, the group has 15 entities with 33 manufacturing plants and four R&D centres across India. It also has an overseas design centre in Taiwan.

The group, which consists of Lumax Industries Ltd and Lumax Auto Technologies Ltd, manufactures automotive lighting, seat structures, mechanism gear shifters, 2-wheeler chassis intake systems, LED lighting integrated plastic modules, electric & electrical components, telematics products & services oxygen sensors, transmission products, on-board antennas and Heating Ventilation Air Conditioning (HVAC) panels.

Lumax Group has more than 10 joint ventures catering to different segments, and one of them is more than three decades old. Through such partnerships, Lumax intends to leverage its own and the partner’s strength to cater to the Indian market. However, a more significant challenge for any company is to sustain partnership for the long term in the right direction. Sahni gives the credit for the company’s successful partnerships to its ‘culture’. “The culture is of finding solutions to the problem through consensus in a collaborative way, respecting the partners and the stakeholders and following a decision-making process. So, this particular culture, which we value a lot in our organisation, helps not only in managing a partnership very well, but also helps in keeping the stakeholders’ trust in the organisation,” explained Sahni.

However, along with partnerships, the group also focuses on strengthening its own R&D capabilities. Lumax has a clear understanding with its partners to become independent in R&D and seek their support whenever required. “In fact, our partners support us in improving our capability of research and development and augmenting our skills in design. Our partners train our engineers. We have a very positive relationship, where along with our partners, we are increasing the capability and competence to fuel Lumax’s growth,” said the Lumax executive.

Last year, Lumax Auto Technologies had signed a memorandum of understanding with Ananda Drive Techniques (Shanghai) Co., Ltd., China, to manufacture and sell various powertrain products for automotive motors and controllers for a wide range of electric vehicles. Ananda Drive Techniques is a leading EV motor and controller manufacturer catering to electric two- and three-wheelers. However, due to the pandemic and the current geopolitical situation with China, Lumax has put further discussion on hold. “We are in contact with them and will resume discussions at the appropriate time,” added Sahni.

On electric mobility, the company prefers to be more conscious considering the way the EV space is shaping up in the country. Explaining the approach towards the EV mobility further, Sahni said, “India from the government side was supposed to be very aggressively pursuing electric mobility. But I think as the situations unfolded themselves, this heat went down, and the pressure was removed by the government itself. The EV mobility will take some time for development. Therefore, today, we have also put up a pause on our strategy for electric vehicles. While, in fact, with the possible partners, we are watching the situation and will take our step in the next strategy meet, which normally we have in December every year,” said Sahni.

The company traditionally has been into automotive lighting solutions and gear shifters. Lumax Industries is engaged in manufacturing end-to-end automotive lighting solutions, including automotive lighting systems such as head lamps, tail lamps, LED Lamps, sundry and auxiliary lamps, HVAC panels and other electronic components. It has technical and financial collaboration with Stanley Electric, Japan for over three decades and SL Corporation, Korea. However, recently, Lumax Industries is narrowing its focus on electronics communication and plastic components, which is a natural choice considering the growing demand for LED lighting. Today, LED lighting is an increasing preference of OEs and customers due to inherent energy efficiency and environment-friendliness. LED lighting also offers creative lighting designs that enhance the aesthetics of a vehicle.

“It is important that we become self-reliant on electronics to grow our lighting portfolio well in the country. Being a leader in the automotive lighting, we need to be strong in electronics which are an important part of LED lighting. But not only that, other joint ventures that we have gone into, for example, telematics, shark fin antenna, also need electronics. As the penetration of electronics in passenger vehicles and two-wheelers is increasing day by day, it makes sense to become self-reliant in electronic capabilities,” explained Sahni.

Last year, Lumax Industries extended its existing joint venture business with Stanley Electric, which covers a complete range of Stanley Electric’s current and future products to the Indian automotive industry. Starting with Printed Circuit Board (PCB) production, a core component of the automotive lighting system, the joint venture will shortly extend its product line to HVAC panels. “The JV extension opens up another venue growth opportunity for us to bring in new products in the Indian market. Therefore, we will set up a new electronics division in Lumax, which is along with our partner, Stanely,” said Sahni.

Lumax Auto Technologies also has a joint venture with Japanese firm Yokowo to manufacture and supply on-board antennas and other vehicle communication products to the Indian automotive industry.

The group is now also pushing for the business verticals under Lumax Auto Technologies. “We have changed our original structure in Lumax Auto. We are now focusing on all other joint ventures, which are relatively new compared to the partnership with Stanley, to grow exponentially in the future. Our objective is to grow both of our companies to a good size,” said Sahni.

Being leaders in automotive lighting, enhancing designing capabilities has always been Lumax Industries’ core activity. It has set up the New Technology Group (NTG), which works on future technologies, benchmarking and affordable costs.

The company has a design office, which has a unique model and is deriving the skill of electronics design of two-wheelers and four-wheelers and tooling management in Taiwan. As part of strengthening its designing capabilities across the globe, the company hired Todd Morgan as its new CTO in January and will set up a design facility in Europe and the US.

“Now, if you put our design centres on the map and analyse it, we are present in India, Taiwan, Japan, US and Europe, and that practically covers all the design aspects of what is required by OEMs in India, whether they are Japanese, European or Korean. We can cater to all of them. A lot of work is happening on R&D and innovations,” said Sahni.

The first two months of FY21 had brought uncertainties due to the nationwide lockdown. To keep its employees’ morale high, Lumax announced no-layoff would take place and took several measures to control the fixed costs and cash flows. As part of these measurements, the employees took voluntary salary cuts across the board. A more considerable challenge for the group was to manage its 30 plants during the pandemic-induced lockdown and the unlock process last year. The company’s investment in digitisation had helped the company to face the unprecedented situation.

“Some of our decisions regarding digitalisation helped us a lot during the pandemic. In many plants, we had all the machines digitised, and we could monitor the operations of machines and energy consumptions on the phones and maintain them. However, during this pandemic, we have also realised that we should have invested more in Industry 4.0, which we will do this year,” said Sahni.

As part of Covid measurements, the group has set up SOPs and training centres to fight Covid. The company introduced medical insurance policy and term life insurance cover for all employees. It also created quarantine centres with seven beds at its Gurgaon and Pune/Chakan facilities to extend support to employees who tested positive and needed to be in quarantine.

This year, the group expects revenue of INR 30 billion, out of which 60 percent is expected from Lumax Industries and the rest from Lumax Auto. As of now, 34 percent revenue comes from LED and the rest from conventional. Segment wise, 66 percent comes from passenger vehicles, 29 percent from two-wheelers and 5 percent from commercial Vehicles.

According to Sahni, most of the group’s revenue comes from the domestic market and export revenue is limited. Now the group is discussing with its partners on export possibilities. “We are together forming a strategy on how to cater to the export market in a win-win situation,” said Sahni. (MT)

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