PUNE: The dusty interiors of Maharashtra are producing many a success story. Among the latest is Precision Camshafts (PCL), which hit the headlines recently after it bought out its 51% partner, the UK-based G Clancey from its joint venture, Clancey Precision Components.
The Solapur-based Precision Camshafts is one of the two camshaft manufacturers in the country, the other being German major Mahle, which has a plant at Pithampur. Yatin Shah, managing director, PCL, was focused on being a niche manufacturer, right from the start.
The family business in Solapur, under the name of Chetan Foundries, manufactured automotive components like brake drum, fly wheels, etc. But Mr Shah, then a fresh young graduate, did not want to work in a family partnership.
Besides, he wanted to be in a niche area, so he looked at the camshafts business, which had just one player, the Rane group, back in the early 1908s. Then, either Engine Valves, the Rane group company, made camshafts or they had to be imported.
“I wanted to be in the auto components business. After all, the family contacts would help. But I found the family business and the structure claustrophobic. So, I started out on my own with six people and four machines, in a 1,200 sq ft building with a capital of Rs 15 lakh, which we increased later to Rs 35 lakh.
Our first year’s turnover was Rs 22 lakh, in 1992,” Mr Shah recalled. In 1993, the fledgling entrepreneur got a boost when they got an order from Mahindra and Mahindra for their tractors. PCL supplied the semi-machined camshafts, which M&M had to machine fully. The big breakthrough came when Escorts decided to take a risk and placed orders for fully-machined camshafts.
Mr Shah said both the parties had a lot to lose: had PCL failed then, the OEM would have had to go back to the Rane group company, which could have raised prices. “We challenged the monopoly of the Rane group, and in 1993, we despatched the first fully-machined camshafts to Escorts. Then, we spoke to Tata Motors (then, Telco) and in 1995 supplied for their 207 series used in the Sumo, Safari etc,” he said.
For some time, there was stiff competition between PCL and Rane group. Eventually, the latter exited the camshaft business. Over the years, PCL consolidated its presence in the domestic market, supplying to the railways, trucks, tractors, diesel engine and passenger car manufacturers.
“Even in 1997 people came from overseas, saw our plant, but declined to source from us because of their biased view of the ‘made in India’ tag. No one was willing to take the risk of sourcing from an Indian producer,” Mr Shah remarked.
So, he decided to piggyback on a foreign company, and formed the JV Clancey Precision Components in 1999 wherein the UK based G Clancey held a 51% stake.
“Clancey got us into the international market. We suggested that they shift some component production to India as their margins were insignificant in the UK. Over time conflicts began to arise since the UK partners were not looking aggressively at growth.
By the end of 2005, G Clancey was in a very weak position, financially. Finally it went bankrupt in July 2006. The administrators took over and we bought out their stake in November,” Mr Shah said.
What they had to overcome was the difficulty OEMs had about direct supplies from India. Now, not only does PCL supply to European customers, it also has an average 350 parts per million (ppm) defects, when the OEM standard is 3,000 ppm.
This has given PCL the confidence. It has recently bagged long-term orders, worth Rs 25 crore, from BMW and Porsche for products which are used in high performance engines. “This will bring in high technology which,” according to Mr Shah, “will allow us to remain ahead of the curve.”
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