Bright Brothers, the Mumbai-based plastic components supplier to automotive sector, plans to demerge its automotive business into a separate entity. The company is also on the lookout for a joint venture partner, preferably an overseas company, that can help it foray into high-value plastic component development and designing in order to establish a major presence in the exports market. Currently, none of the company's product lines, which include bumper grilles, console assemblies, bumper fronts, radiator grilles, trim scuff, dashboard assemblies etc., go as direct exports.
The company also plans to set up a an 8,000 square meter facility at Sriperumbudur in Tamil Nadu to cater exclusively to Hyundai Motor India's (HMIL) growing requirements. An investment of Rs eight crore is envisaged for this over the coming year.
The plant is slated to go on stream by March with 4,000 square meters being utilised in the first phase. At present, the company supplies nine different components to HMIL from its Pondicherry unit which will go up to 23 when the new unit goes on stream Bright Brothers expects to generate around Rs 40-50 crore worth of business from Hyundai Motor, more than double the current level of Rs 12-15 crore once the new facility comes on stream.
HMIL's second plant with a capacity of 150,000 units per annum is currently being built on a 2.1 million square meter site near the existing facility. On completion by 2007, the company's annual manufacturing capacity will go up to 400,000 units. In addition to serving the domestic market, output from the second plant will be shipped to Europe, Latin America and neighbouring markets, including the Middle East. The second plant will build the successor to Santro, Hyundai's first offering in local markets.
The Mumbai-based company is an Original Equipment Manufacturer (OEM) supplier to the country's leading passenger car, commercial vehicle and white goods manufacturers for which it supplies injection-moulded plastic components. Its OEM customers include Maruti, Hyundai, Tata Motors in the automotive sector.
In the consumer durables sector, it also markets crates and house ware under the
brand name 'Brite' in the domestic market.
Tarapur facility shut
Bright Brothers has five manufacturing facilities for plastics parts and sub assemblies at Gurgaon which caters to Maruti and Honda Motorcycle & Scooter's requirements, Pithampur for Kinetic Motors, Force Motors and Eicher Motors, Pondicherry for HMIL, Visteon, and others, and Pune, set up last year, which caters to Tata Motors and Mahindra & Mahindra.
The company recently shuttered its Tarapur facility near Mumbai and relocated it to Sanaswadi near Pune thanks a change in its customer profile. According to the annual report of the company 2004-05, the company has entered into a memorandum of understanding (MOU) to sell both the land and building at Tarapur.
Bright Brothers' exclusive facility for HMIL at Sriperumbudur will cater to both local and export requirements. When the facility comes on stream, it will cater to HMIL's entire requirements which were hitherto handled from the Pondicherry facility, which is around 180 kilometers away from the Hyundai factory.
The Chennai facility will be Bright Brothers' sixth one and in order to better to utilise
the capacity, it is currently in talks with Ford India for potential business.
Bright Brothers has been in the plastic components business for nearly six decades having been established way back in 1946 by T W Bhojwani. It started as a plastic moulding unit for manufacturing household plastic items and grew to become one of the largest plastic bag makers in the mid-1960s.
In the early 1970s, the company tapped the potential in the consumer durables sector making customised moulded panels for some of the leading white good maker at the time.
When Maruti was set shop in the 80s, Bright Brothers was able to enter the auto plastics business. Maruti had a single vendor policy for most of its component requirements in the initial years. However, as it introduced more models and sales began to increase, the company invited bids for a second vendor for plastic components in the early nineties and company grabbed the opportunity and was able to become a major vendor for Maruti. The company had established its presence as automotive component supplier by the time Hyundai set up its manufacturing operations in the late 1990s. It has been a key supplier to Hyundai since inception. The Bhojwanis had two separate companies Bright Brothers and Bright Automotive & Plastics to cater to their clients until 2000 when the latter was merged into Bright Brothers which became the sole publicly-listed entity. 'We merged the two entities as
we were catering to both automotive and consumer durable businesses from multiple locations. The purpose of demerger now is the growing size and increased customisation and demand from the automotive sector' said Suresh Bhojwani.
Increasing use of plastics
'The plastic components in a passenger car has gone up three times over the last two decade in India' says Suresh Bhojwani, Vice Chairman, Bright Brothers citing the example of Maruti's 800 which used around 25 kg of plastics against nearly 70-75 kg being used in some of its latest models.
He said that plastic may not play a very critical role in a car from safety point of view but is very important from the aesthetics perspective. A large part of interior paneling is finished using plastic components like instrument panels, dashboards etc. Additionally, commercial vehicle manufacturers are taking a cue from passenger car makers by giving increased importance to driver comfort and this could see increased demand for plastic components from automotive sector. The company hopes to tap the potential for additional plastic usage in automobiles like under-the-hood components, radiators components, external engine components, fuel tanks among other things.
At present, the company derives around 50-54 percent of its turnover from automotive sector while around 25-30 percent comes from consumer durables. Passenger car manufacturers are the major customers within the automotive sector with 70-75 percent share followed by two wheeler manufacturers who constitute around 15 percent and commercial vehicle makers account for the remaining share.
Total turnover for the year ended 30 June 2005 stood at Rs 148.50 crore and the company notched up Rs 10.21 crore profit at the operating level. It made a net loss of Rs 4.73 crore after tax for the year 30 June 2005 as against a net loss of Rs 2.20 crore in the previous financial year.
The company's secured and unsecured debt amounted to Rs 58 crore as on 30 June 2005. 'We will are concerned about the high debts on our books and will make an effort to reduce the same going forward,' said Bhojwani. He adds that the company's expansion activities is likely to be funded from internal accruals and no additional debt will be taken by the company.
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