Munjal Kiriu Industries

8/11/2019 Munjal Kiriu Industries

1/15

Munjal Kiriu IndustriesIntroduction

Munjal Kiriu Industries ICRA has revised the long-term rating

outstanding on the Rs. 119.46 crore of long-term loans and Rs. 10.20

crore1 of working capital facilities of the Munjal Kiriu Industries Private

Limited (MKIPL) to [ICRA]BBB (pronounced ICRA Triple B) from

[ICRA]BBB+ (pronounced ICRA Triple B Plus). The outlook on the

rating has been revised to Negative from Stable. The revision in

long-term rating reflects deteriorating financial profile of the company

as reflected by widening of losses and consequent weakness in credit

metrics. In 2011-12, MKIPLs performance weakened considerably on

account of lower than expected demand from its key customers

primarily due to production disruptions at OEMs end coupled with

slowdown in the industry and cost-based headwinds in form of higher

input material consumption and power & fuel requirements. Engaged

in manufacturing of castings-based components for non-automotive

and automotive applications, MKIPL has emerged as a key supplier of

brake discs and drums for passenger vehicles OEMs in India over the

past two years. With strong technical support and association of its

key shareholder Kiriu Corporation with leading Japanese OEMs, the

company has managed to secure healthy share of business for brake

disc and drums for some of the key models of Japanese OEMs in India.

However, despite scale-up in volumes and an improving product-mix

(i.e. higher share of machined components), the companys operating

performance continues to be marred by higher than optimum level of

wastages. During the year, the company also concluded its capacity

expansion plans, which were largely debt funded. With higher than


2/15

estimated outflows on capital expenditure, the cash flows remained

significantly negative and the companys credit metrics deteriorated

during the year. These credit challenges are however mitigated to an

extent by financial assistance from parent companies and visibility of

new business orders from existing clients.

Hero & Kiriu Joint Venture

October

2006:SOP as Hero Motors Limited FCU

June

2007:MoU with Kiriu & Sumitomo

July 2007:Incorporated as 'Hero Kiriu Industries Private

Limited' on 27-Jul-07 and rechristened to

Current name on 27-Aug-07

December

2007:JV Agreement & Technical Assistance Agreement Signed

Hero Motors Limited, a part of Hero Group(India) and Kiriu

Corporation, a Company in Sumitomo Group of Japan have Formed a

Joint Venture Company, Munjal Kiriu Industries (P) Ltd. to

manufacture Brakes Discs, Brakes Drums, Cylinder block, Pressure

plate, Brake plate and Steering Knuckles for automotive original

equipment manufactures in the Indian and overseas market. The New

Company is investing Rs.250 Crore in the plant at Manesar, Haryana

(India), 60km from Delhi and is equipped with state-of-art foundry

having Disa-matic moulding line, compatible sand plant of 80T/Hr with

sand multi controller, dual truck induction melting furnace and online

shot blasting machine. This alliance is a strategic move to focus on


3/15

high technology, high quality and high precision automotive

manufacturing.

Company Profile

MKIPL was formed in December 2007 when Hero Motors Limited (HML)

(rated [ICRA]A & [ICRA]A1) hived off its foundry business into a

separate company to form a joint venture with Kiriu Corporation,

Japan (subsidiary of Sumitomo Corporation, Japan). In February 2011,

Kiriu Corporation and its parent company, Sumitomo Corporation

increased its stake in the company from 33% to 51% by infusing Rs.

45 crore in the company and also acquired stake from HML for a

consideration of Rs. 75 crore. MKIPLs manufacturing facility is located

at Manesar (Haryana) with a foundry capacity of 48,000 MT per

annum. MKIPLs Board includes representatives from the Munjal

family, Kiriu Corporation, and Sumitomo Corporation. The company is

engaged in manufacturing of ferrous castings for automotive and

consumer durables industry. In the automotive space, it manufacturesbrake discs, drums, knuckles and certain other automotive

components mainly for OEMs in the passenger vehicle segment. In the

non-automotive segment, it manufactures cylinder blocks in casting

condition and crank cases, which primarily find application in

compressors for consumer durable industry. By virtue of its Japanese

parentage, the company has managed to secure healthy share of

business with leading Japanese OEMs such as Maruti Suzuki, Nissan,

Toyota and Honda.


4/15

Group Profile

Hero, the brand name synonymous with two-wheelers in India, is a

multi-unit, multi-product, geographically diversified, Group of

Companies - the reflection of the steely ambition and indomitable grit

of the Munjal Family.Hero began its journey around five decades ago.Munjal Brothers, the founders of the Hero Group, started out in 1956

in business of bicycle components, and then complete bicycles.Like

every success story, Hero's saga contains an element of spirit and

enterprise; of achievement through grit and determination, coupled

with vision and meticulous planning.

Hero Group ranks among the Top 10 Indian Business Houses

comprising 20 companies, with a turnover of More than US$ 4.5 billion

. The Group and its management have acquired a number of accolades

and achievements over the years. The management style of the Hero

Group has been acclaimed internationally by leading management

institutions like INSEAD (France). London Business School, UK, has

done a study on the Group as a Model of Entrepreneurship. Based on a

world-wide study, the World Bank has acclaimed Hero Cycles as a role

model in vendor development.The Hero Group's strengths include

engineering capability; relevance and salience of the Hero brand; a


5/15

wide distribution network; management's commitment to quality; and

experience in handling large volume production and distribution.

More About Hero

KIRIU was founded in 1906 as a manufacturer and distributor of

machines for textile preparation. The hundred years since our

establishment have transformed us into a machine tool manufacturer,

and in turn we've become a maker of automotive components.

Currently we provide comprehensive services from planning, design

and development to the manufacture of brake disks and drums, and

even to the machining of such components. Thus we are truly

becoming "a world-class specialized brake disk/drum manufacturer."

We have in recent years transplanted to our global hubs the wealth of

technology and know-how we've accumulated Japan under the "IKKI-

SEISAN" philosophy. Thus we've implemented a system that provides

"KIRIU quality"-a hallmark of uniformity and consistency-in our

factories all over the globe. We count as customers many automobile

manufacturers and brake system manufacturers worldwide, offering

them a range of technical solutions that anticipate the needs of the

marketplace.
http://heromotors.com/history.htmlhttp://heromotors.com/history.htmlhttp://heromotors.com/history.html


6/15

1960 Started supply of automotive parts to PRINCE MOTOR CO.,

LTD. (current NISSAN)

1968 Started supply to FUJI HEAVY INDUSTRIES LTD.

1977 Started supply to JATCO LTD.

1988 Started supply to DAIKIN INDUSTRIES CO., LTD.

1994 Started supply to HONDA MOTOR CO., LTD.

2002 Started supply to SUZUKI MOTOR CORPORATION

2003 Started supply to ADVICS CO., LTD. (as tier 2 of MAZDA

MOTOR CORPORATION)

2004 Started supply to BOSCH CORPORATION (as tier 2 of

TOYOTA MOTOR CORPORATION)

2005 Started supply to DANA CORPORATION

2007 Started supply to ADVICS CO., LTD. (as tier 2 of GENERAL

MOTORS CORPORATION)

2009 Started supply to MANDO CORPORATIONas tier 2 of

GENERAL MOTORS CORPORATION

2009 Started supply to GENERAL MOTORS CORPORATION

2011 Started supply to AutoAlliance (Thailand) CO., LTD.

2014 Started supply to MITSUBISHI MOTORS CO., LTD.


7/15


8/15

Strategy For Complete Customer

SatisfactionCustomers

Reliability: Hero Group Strength with Kirius Proven Track Record in

Disc, Drum & Knuckles Manufacturing.

Assurance: Technical and Design Support from Kiriu & Hero Global

Design.

Development: Optimization of resources to Deliver the highest

quality at a justifiable cost.Quality: Kirius Technical Strengths & Hero Groups Best Practices, to

satisfy the high Quality standards of customer.

Delivery: Commitment from Hero Group Kiriu & Sumitomo, already in

action for major automotive and white goods manufacturers of

repute.

Value Addition: Year on Year Efficiency Improvement for Customer.


9/15

Products

Product Profile

Munjal Kiriu Industries is a joint venture between Hero Group (India)

and Kiriu Corporation of Japan, a Sumitomo Group company. The

company manufactures automotive and non automotive products. The

automotive range of products includes brake discs, drums, pressure

plates, and steering knuckles. Catering to OEMs and Tier 1 suppliers

like Nissan, Nissan Ashok Leyland, GM, Bosch, Valeo, Maruti Suzuki,

and FCC Rico, the company manufactures the products at its well-

equipped manufacturing infrastructure at Manesar near Delhi. AnTS/ISO 16949: 2002 certified company, Munjal Kiriu Industries lays

high emphasis on quality. Operating at a subsidiary of Kiriu

Corporation, the company also caters to foreign markets. The brake

discs the company offers, find use in the brake systems of

automobiles. They are often fitted to the respective wheel hubs and

rotate with the wheel. The brake pads rub against the wheel discs to

induce friction, and retard the vehicle speed.

Brake parts


10/15

KIRIU makes products using materials ranging from ductile cast iron

to ordinary cast iron. With these materials we make brake parts,

automatic transmission parts and engine parts under the "IKKI-

SEISAN" system encompassing design, development and

manufacturing. Our customers have absolute confidence in KIRIU

products, knowing they provide superior performance. In addition to

automotive parts, we manufacture air-conditioner parts, Oil pressure

parts and other products.

Brake disc

Brake drum


11/15

Other automotive parts

Automatic transmission parts

Air conditioner parts

Support bracket

Diff. case

Engine mount bracket

Air-conditioning parts

PLANNING


12/15

KIRIU design products and technologies to realize the ideal brake discs

with fundamental safety and relief and stable function, and reasonable

economy by making full use of our expertise in brake discs and drums.


13/15

PRODUCATION & ENGINEERING

Homogenization of graphite microstructure.

The graphite property of a metal structure has a negative impact on

brake disc performance.

To achieve Homogenization and accuracy, we use "K-FGI" to

automatically measure the metal's properties and identify the optimal

manufacturing method.

This information is fed back to the Planning and Design groups.

*K-FGI, developed in-house by KIRIU, quickly and automatically

measures metal graphite microstructure .


14/15

K-FGI stands for "KIRIU Flake Graphite Structure Index." It measures

the level of graphite structure based on a quantification index.

Keeping accuracy of dimension and measuring resonant frequency.

The proper gating system and accuracy of the corebox and mold

pattern are important to ensure minimum variation of material. The

resonant frequency of the casting is closely tied to improving this

accuracy


15/15

PRODUCATION EQUIPEMNT

KIRIU has independently developed dedicated production lines for

brake discs and drums to meet the global standards enforced in all

regions where we operate. These lines employ standardized facilities,

jigs/tools and design standards to ensure uniformity and consistency

while achieving the ultimate in operability, workability and

maintainability. The result is guaranteed high productivity on behalf of

our customers.

We have also implemented a "IKKI-SEISAN" system, which reflects

KIRIUs core philosophy by incorporating in-line surface treatment,

coating and baking processes to optimize the flow of products. This

facilitates movement and minimizes stops in manufacturing.

Documents

Munjal Kiriu Industries