Munjal Kiriu Industries

Introduction
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
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
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 manufactures
brake 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.

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
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.









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.



Strategy For Complete Customer
Satisfaction

Customers

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.































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. An
TS/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



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


Other automotive parts

Automatic transmission parts



Air conditioner parts
Support bracket
Diff. case
Engine mount bracket
Air-conditioning parts


PLANNING







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.






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 .


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






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.