New Delhi: Suman Kant Munjal, a reclusive member of the family that controls Delhi-based Hero Group, is seeking to create an identity independent of it.
Munjal’s company Rockman Industries Ltd, a large supplier of parts to India’s largest two-wheeler firm Hero MotoCorp Ltd, on Monday said that it has acquired a majority stake in carbon composites maker Moldex Composites Pvt. Ltd.
Through the acquisition, the second son of the late Brijmohan Lall Munjal, the family patriarch who died in 2015, plans to enter the aerospace, motorsport and high-end automobile component manufacturing space.
The acquisition of Moldex is the third such by Suman Munjal’s own family business after Hero Electronix, run by his son Ujjwal Munjal, acquired Tessolve Semiconductor Pvt. Ltd in April and the India business of German electronics design services company TST DST Holding Europe in July.
The semiconductor and auto businesses are being run separately, with each having a target of Rs5,000 crore in sales in the next five years. Rockman Industries’s annual revenue is around Rs2,200 crore and that of Hero Electronix around Rs1,200 crore.
Rockman has always had plans to diversify, but a spurt in demand for two-wheeler sales over the last 10 years has kept it busy serving Hero MotoCorp, the flagship of the group.
“The last 10 years, we have grown very rapidly—at 25% CAGR (compound annual growth rate). So, just to keep up with that growth has been challenging enough. At the group level, the focus has always been to support this (the two-wheeler business) first... Today, we believe that further growing and increasing within the same thought process will be difficult for us and Hero MotoCorp," Ujjwal Munjal said.
While Rockman will continue to grow organically with Hero MotoCorp at and around the two-wheeler maker’s existing locations as well as new ones, a significant chunk of the Rs500 crore of investments planned over the next two years will go into diversifying Rockman’s interests into the commercial and passenger vehicle space.
This is where Moldex, which makes carbon composites, comes into the picture. Composites are typically used in place of aluminium castings and make vehicles as well aircraft lighter. They have superior strength-to-weight ratio than steel or aluminium.
The reduction in weight translates into aeroplanes carrying a larger payload for longer distances while reducing emissions. It helps vehicles accelerate and run faster.
Regulatory requirements including stringent emission norms and moves to popularize electric and hybrid vehicles have increased the focus on the need to reduce the weight of automobiles.
“Moldex is a phased acquisition. It will be close to a Rs100 crore valuation. We’ve already set up a European office. We are looking at expanding our footprint now. We are entering the US market over the next few months," said Ujjwal Munjal.