For mechanical engineer SDM Rao, Samkrg Pistons & Rings Ltd was a project after his heart. And it is his enthusiasm, driving ambition, as well as focus on technological improvement?whether through R&D or collaboration?that has made Samkrg what it is today: a preferred supplier of pistons and rings primarily to domestic and some international two-wheeler manufacturers. Today, the company?s turnover is Rs 101.63 crore (2006-07) and employs 1,000-odd people. From just one facility with the capacity to produce 6 lakh pistons a year, Samkrg now has three facilities with an aggregate capacity of 6 million pistons and 18 million piston rings, annually. Samkrg?s client list is impressive, it includes Bajaj, TVS, Honda, Kinetic, Yamaha (Europe), Piaggio, Bendix and Knorr-Bremse. Rao?s success mantra, ?We are capable of developing new products within six weeks compared to our competitors who take between 20 and 24 weeks, and we offer high quality product at low cost.?
The story began in 1985 when Rao, hailing from an agricultural family, decided to try his hand at business. The idea of manufacturing pistons struck him while he was working on a Unido technology-transfer project. He started Samkrg with an investment of Rs 7 crore, and with a technical arrangement with Cheng Shing Piston Co, Taiwan. Says Rao, ?Initially, IFCI supported me with Rs 12 lakh loan at 1% rate of interest and I raised funds from friends and family members aggregating to about Rs 2 crore. Then the company raised Rs 5-crore debt financial institutions like IDBI, IFCI and ICICI.?
In the early days, when it was relatively easy to raise funds from banks and other financial institutions, Rao preferred limited borrowings and mostly funded expansion through internal accruals. Even today, he and his family members still own around two-thirds of the company. In
August 1997, he received ISO 9002 accreditation by the Dutch Council of Accreditation. After the start of commercial production at the first facility in October 1988, at Bonthapally near Hyderabad, Rao recalls, ?I never looked back since I took the decision to become an entrepreneur. I wanted to give back to the place where I come from, so I decided to set up the other two facilities in Srikakulum district. Funding was arranged, the plants were set up and over the years the company kept moving up the ladder of success.?
Now, after investing about Rs 120 crore, he has a plant at Bonthapally, about 31 km from Hyderabad airport, where he manufactures pistons and pins; at the second facility at Varisam, about 69 km from Vishakapatnam, he produces piston rings; and a third plant at Akkivalasa, which is also near Vishakapatnam, where he manufactures both pistons and pins. As the aggregate capacity of the plants may not be sufficient to meet burgeoning demand, Samkrg has chalked out plans to expand overall capacity to 7.5 million pistons and 25 million piston rings. ?This will be done in two years with an investment of Rs 15-20 crore, again through internal accruals. The local market is very competitive and contributes nearly 70% of our turnover, including the OEM and replacement market,? says Rao, adding: ?Export is a very large and a crucial market. Initially, it was very difficult to get orders, but once the buyer gets confidence, things start falling in place.? That confidence comes from Rao?s constant effort at improvement. Samkrg spends nearly 2.55% of net sales on R&D. As a result, the company has orders from some 15 countries. ?We are raring to explore other markets. In fact, we are working with couple of international players for supply of pistons and rings. Samples have been sent to Deutz, Germany and they are under validation,? says Rao.
Rao is also working with TVS Motor Company for its Indonesia project. But Europe, of course, remains a key focus area. ?We are already strong in markets like Italy and Germany. Our future plan is to strengthen our presence in countries where we already exist, especially the UK,? he adds. Rao?s ambitions do not end at filling his export order book, either. Samkrg plans to expand its horizon, both in terms of product range and industry segment. On the one hand it is planning to enhance its product line by manufacturing connecting rods, cylinder and cylinder heads, while on the other, it is expanding its target segments to light commercial vehicles and cars. International acquisitions are also on the cards. ?We might either look at acquiring an international company or go in for a technological collaboration. If we opt for acquisition, the investment will be in the range of Rs 30-40 crore. We will bring the product-line here to one of our existing facilities or set up a new facility, probably closer to the OEMs to reduce cost. Talks are on with German and European companies. However, we will take a call on the new venture only in 2008,? he says.
After considerable success in the two-wheeler segment, Samkrg is also looking at manufacturing pistons and rings for light commercial vehicles and cars. In December 1999, the company started commercialised production of ring carrier pistons for tractors, LCVs and HCVs with German technology. ?We entered the tractor segment recently. Now, the idea is to further expand our target segments. We are working with several companies in the domestic and international market. In fact, we have been short-listed for the Tata small car project and we are also looking forward to supplying Volkswagen,? he added. In 2006-07, he received the Honda Quality Achievement award for the second consecutive year for achieving Zero PPM rejections in quality, warranty and defaults in delivery.
Despite the success, one of the key problems that Samkrg faces is attrition?between 10% and 15%. ?The growing attrition rate is a big concern in the auto-component industry. We try to retain our workforce by offering training. We have a full-fledged training facility in all the three facilities to keep employees abreast of the latest technological advancements,? he says. Hopefully, that should put the brakes on departures.
