Winning through Technology: A Case of Advik Hi-Tech Pvt. Ltd.
Aditya Bhartiya was 23 (2000), when he joined his father’s business. He found that his parental business is not exciting enough. So he set up a unit to manufacture tensioners for two-wheelers. A gadget that keeps the vehicle’s timing chain taut, this was till then being imported. The technology had just shifted from two-stroke to four stroke engines and a lot of products had to be imported from Japan at a high cost. Bhartia offered a replacement of these imports at a fraction of the price.
Technology was an entry barrier so Bhartia’s Advik Hi Tech Pvt. Ltd. tied up with Sunworld Industrial Co. of Taiwan for help in designing, developing, and testing in initial batch of tensioners. Sunworld also helped Advik in establishing research and development centre. By 2010, Advik has better technology than Sunworld.
Advik’s first customer was Bajaj Auto which gave the fledgling company its first order for tensioners in 2000. As the year went by, it continued to be a regular buyer beginning to buy decompression units for its four-stroke, three wheeler engines in 2001, then fuel cocks and oil pumps in 2003.
In 2003 Honda Motorcycle and Scooter India became the second customer of the Advik. Soon they went on to export to PT Astra Honda Motor in Indonesia. Advik’s every component has been tested and approved by Honda’s R&D headquarters in Japan and has been rated high on all five factors of quality, cost, delivery, development capability and management. More customers kept coming on board along the way: Suzuki Motorcycle, Yamaha, Kawasaki, LML, Lombardini, Mahindra Two Wheelers, Force Motors, Greaves Cotton, Ducati Motor Holding, Motori Minarelli and Piaggio.
In November 2009, Avik entered into technical collaboration with Trochocentric GmbH to launch its foray into components for four wheelers. The two have established a new company Advik Precision Pvt. Ltd. for which a Rs. 325 crore plant is being set up close to Advik HI-Tech’s existing Pune Facility. It will manufacture Oil Pumps, water pumps and hydraulic tensioners for cars. Bhartia expects that in next 5-10 years, the small car will go the two wheeler way. “Tie up will give us access to the cutting-edge technologies of a global market leader with 30 years of experience and expertise in Oil Pumps,” Bharita says. And the advantage is that the German Company is an R&D house not a manufacturer - so there will be no market restrictions for Advik, only access to customers like Volkswagen and Mercedes.
With the Indian auto component industry having reached an estimated size of Rs. 68,000 crore in 2006-07 and growing at a compounded annual growth rate of 28.9%, Advik looks set to keep racing along especially with plants for two more plants at Manesar and Pantnagar. By 2015, Bhartia is looking at running a Rs. 500 crore group with an equal split in business between two and four wheelers.
Source: Business Environment, Dr Vivek Mittal, Excel Books
