Endurance Technologies expects the potential of the aftermarket segment to reach $100 million in three to five years, and multi-product manufacturing expects a share of it.
Aurangabad-based Tier 1 manufacturer Endurance Technologies, the country’s largest supplier of parts for two-wheelers and three-wheelers, is adopting a two-pronged strategy to expand its footprint and margins in markets nationals and foreigners.
The diversified company has 29 plants in India and Europe. It also exports products to more than 31 countries, including newly joined countries such as Rwanda, Burundi, Brazil and Vietnam. The Indian arm generated around Rs 421 crore in sales for the company in FY22, reflecting an increase of 5.5 per cent over the previous year.
He also expects the business to grow four to five percent faster than the industry. As part of this strategy, in addition to tires and lubricants, the company recently added several high-volume margin products that are used in electric scooters and e-3W. The export market is also on the radar and Endurance Technologies’ new list of countries includes Africa, the Middle East and Latin America.
Company management says the goal is to grow faster than the industry and competitors, while surpassing the $100 million sales mark in the coming years. Speaking on the sidelines of AutoExpo 2023, Prabhas Chandra Dash, President, Aftermarket & Exports, Endurance Technologies said, “Our target remains to grow at least four to five percent more than the competitors and the industry.”
Citing ACMA data, company executives said the entire automotive components sector expanded 3.3 percent over the previous three years, including when the pandemic was at its peak. . Endurance Technologies, on the other hand, managed to grow around 12-13 percent, they added. Although that kind of leap seems unfeasible now, given the slowdown in many markets globally due to inflationary challenges amid geopolitical challenges. Executives, however, feel that even a modest four to five percent growth relative to industry growth is still reasonably acceptable for the company. Another obstacle to secondary market exports appears to be currency instability due to the tightening of monetary policy by the US Federal Reserve (Fed), which has resulted in higher interest rates. As a result, the US dollar has gained, leading capital to flee emerging markets.
In addition, it is reducing overall consumer sentiment. To prevent instability from affecting business, Endurance Technologies had earlier decided that it would only operate in countries where there were Indian OEMs, but that plan has changed. It is now working with a few Japanese automakers from countries like Indonesia to bring in the incremental business. This strategy has worked well and the principle has been successfully adopted in South America with the help of reverse engineering, where the biggest brands compete fiercely.
Aftermarket offerings from Endurance Technologies include camshafts, clutch shoe assemblies, steering bearing kits, tires and variator assemblies. In India, Endurance Technologies is focusing on key states like Rajasthan, Gujarat, Telangana, Andhra Pradesh, Tamil Nadu and Karnataka, although forays are being made in other parts of the country. The company sells aftermarket items to countries including newly added ones such as Rwanda, Burundi, Brazil and Vietnam. While the company expects domestic aftermarket sales to expand by 15 to 20 percent, export markets are expected to remain flat, if not negative, due to geopolitical issues such as they are observed in Sri Lanka, Bangladesh and Egypt. Another source of concern for Indian exports appears to be the slowdown in European markets.
To have a localized presence in Europe, Endurance Technologies bought an Italian company called Frenotecnica in July 2022. Frenotecnica, owner of Brenta, manufactures friction materials and components for braking systems such as brake pads for two-wheelers. In 2021, Brenta’s sales revenue was 3.6 million euros and an EBITDA margin of 1 million euros. It’s Endurance Technologies’ third acquisition of an Italian company, following the acquisitions of Grimeca and Adler in 2020. If that’s not enough, management has hinted at the potential for further acquisitions. At a recent investor conference, the company highlighted its efforts to create a richer product mix with more[1]fringe items such as front forks, paper clutches, fully machined castings, ABS and drive shafts, among others.
Serving various OEMs, the company is also expanding its disc brake, ABS assembly and alloy wheel capacity expansions, as well as focusing on the electric vehicle (EV) market, which is estimated to will reach $150 billion by 2030 and has already started supplying brake components. , suspension and cast aluminum products for electric scooters and e-3W.
This feature was first published in the 1 February 2023 issue of Autocar Professional.
