Corporate Reports
Asia Motor Works, a new entrant to the heavy commercial vehicles segment, has made
giant players move into top gear to catch up with its series of hi-tech global trucks
he arrival of a new entrant into
T
the Rs40,000 crore heavy com-
mercial vehicles (HCV) market
has made well-entrenched players like
Tata Motors, Ashok Leyland and
Eicher sit up and tighten their girdles
to meet the challenge posed by the
fully-loaded 'Global Truck' being
offered at 'Indian' prices.
Ever since the first in the series of
Global Trucks rolled out of the state-of-
the-art Asia Motor Works' (AMW) plant
near Bhuj in Gujarat in December
200S, not just the market leaders but a
few other automobile manufacturers
have also started working on products
that can match these top-of-the-line
trucks.
Till 200S, the HCV market in the
country was dominated by two big
players - Tata Motors and Ashok Ley-
land. In 2002, when the then 26-year-
old and fresh-out-of-college Anirudh
Bhuwalka decided to get into truck
manufacturing, the Swedish auto giant
Volvo had already begun testing the
Indian market.
Bhuwalka was impressed by the sta-
tus of truckers in the US and Europe
and wondered why Indian truckers
worked under such harsh conditions.
"Indian truck drivers literally have to
sweat it out. The trucks they drive are
jerky and take a toll on their health.
Why can't driving a truck be a pleasur-
able experience, as in the .uS and
Europe?" he asked himself.
"While trucking in the US and
Europe is a respectable career, with
trucker during his holidays '0
many a college boy taking up a job as a
earn an
extra buck, a truck driver in India does
not enjoy the same kind of respect
from society. This is because of the
grease, grime and slime associated with
Indian trucks," points out Bhuwalka.
To scale up the Indian truck market,
Capacities
50,000
Press shop (tonnes) 25,000
.88 •
•
• June 14-27, 2010
Bhuwalka felt it was necessary to intro-
duce a world-class truck at a competi-
tive price. Already, Volvo and German
truck major Maschinenfabrik Augs-
burg-Nurnberg AG (better known as
MAN) had forayed into the Indian mar-
ket. The challenge before Bhuwalka
was therefore to make available to the
Indian market a truck that had features
comparable to those of Volvo and MAN
trucks at a much lower price.
Thus, the idea of making a Global
Truck culminated in the formation of
Asian Motor Works Ltd, a closely held
company promoted by BhuwaIka, his
friends and family. His uncle Shashi
Ruia chipped in with the Essar group as
a strategic mentor, guiding him along
the way. "From the very beginning, I
had decided to adopt the North Ameri-
can manufacturing model, which is
followed by the world leaders. This
model is based on sourcing essential
and critical parts and components
from across the globe, while retaining
control over innovation and the man-
ufacturing platform," says Bhuwalka.
"This business model not only helps
ensure that we use contemporary tech-
nology from leading manufacturers
BUS I N E S SIN D IA • June 14-27, 2010
across the globe, but also ensures inno-
vative products enter the Indian mar-
ket. This has worked to our advantage
as we are now able to plug the product
gaps that existed in the conventional
trucking industry," he says.
A golden opportunity to realise his
dream project came Bhuwalka's way in
2002 when the Gujarat government
.beckoned entrepreneurs, offering
them tax holidays if they invested in
the earthquake-devastated Kutch dis-
trict. Quick to respond, Bhuwalka
bought, at Rs15 crore, 600 acres ofland
adjacent to the Bhuj-Bhachau road,
near Bhuj.
The location of the proposed site of
the plant had many advantages. The
site, strategically located close to two
major ports - Mundra and Kandla - on
the west coast, provided easy access to
international markets in the West as
well as Indian markets in the north,
south and west regions. Moreover,
logistically, it would be economical
and easy to source steel, the main raw
material used in the manufacturing of
a truck, from Essar Steel, which has a
plant in Hazira near Surat.
Having selected the plant site,
Bhuwalka went about scouting for
skilled manpower, technical as well as
managerial, and associates from whom
he could source the latest technology
and vital components.
Bhuwalka decided to source the
engine of AMW'S Global Trucks from
Cummins, the best in the market for
operating on rugged terrain; the gear-
box from ZF of Germany, which offers
a high power-to-weight ratio and
improved start-up even with heavy
loads; clutches from Valeo of France,
for easy gearshifts and less wear and
tear; axles from Meritor, US, for better
traction on uneven surfaces; and cabin
shells from China.
For the design of the AMW assembly
plant, Bhuwalka commissioned Durr of
Germany, while C.R. Narasimhan was
employed as the architect. "The entire
plant came up in the record time of 18
months," says Shyarn Ozarkar, general
manager, manufacturing, engineering,
who has worked with the tractor divi-
sion of Mahindra & Mahindra.
The Global Truck assembly line is
semi-automated, with the capacity-to
roll out 50,000 trucks a year. Besides
the assembly line, the AMW facility in
Bhuj also has a frame shop, a weld shop
and a paint shop. Over 1,000 engineers
and technicians were hired from major
Indian players.
Creating a stir
When AMW rolled out its first Global
Truck in December 2005, it created a
major stir in the Indian market, both
among truckers as well as manufactur-
ers. Here was a 25-tonne truck cher-
ried-out with a fully air-conditioned
crash-proof driver's cabin, power steer-
ing, nine-speed gear, FM radio set and a
resting berth - features that rival top-
of-the-line truck models. "The features
of a Volvo at the price of a Tata truck,"
is how the marketing team of AMW
likes to put it. To be sure, major com-
ponents of the truck - the engine, axle,
gear box, clutch, brakes and cabin shell
- were bought from local and overseas
suppliers. But here was a truck that
marked the entry of a serious player
into the market.
Since its first truck, AMW has pro-
duced 10,000 trucks so far and plans to
ramp the number up by 25,000 in the
next couple of years. The company has
invested Rsl,400 crore so far into the
project. "We have made all the neces-
sary investment needed to acheive the
full planned capacity of the manufac-
turing facility at Bhuj," says Bhuwalka.
The company has no immediate
plans for going to the capital market
'with an initial public offer. However,
Bhuwalka is exploring the option to
rope in private equity participation.
AMW plans to more than double its
production from 700 to 2,000 trucks
per month in the next eight to nine
months, a top company official said. It
also plans to hire 500 professionals to
meet the production challenges.
AMW has already launched 13 mod-
els in the Indian market and plans
more launches soon. ""We plan to
launch at least five new models by
Corporate Reports BUS I N E S SIN 0 IA • June 14-27, 2010

road applications.
"In a short period, AMW'S models
like 4923, 2523 and 2518 have won
immense customer acclaim. Today, it
is part of all major National Highway
and other infrastructure projects, with
the brand capturing a healthy 10 per
cent of the addressable market," says
Bhuwalka.
Its customers list includes mining,
bulk transportation and construction
companies such as L&T, HCC and Gam-
mon as well as major fleet operators
like DRS, TCl and Safex. .
"We found AMW trucks extremely
sturdy and suitable for Indian condi-
tions. We were also impressed with
their price points and would look at a
few units for our mining operations in
the coming days," says Raghavendra
Rao of MSPL, a leading iron ore mining
company in Karnataka.
"The air-conditioned cabin is a big
bonus as our drivers are less fatigued
and able to operate without breaks,"
says Hazim, managing director, Munir
Enterprise, Bellary, Karnataka, who has
bought more than 30 AMW Tippers.
"The efficiency of our AMW trucks
has clocked a 30 per cent increase in
driver productivity and helped my
business grow. With more trips
being made, my revenues are higher
from day one," says K. Narsimha
Reddy, managing director, KNR Con-
structions Ltd, which has bought over
100 AMW trucks.

mid-201l. The new models' price
range will be between Rs15-25 lakh,"
Bhuwalka said. AMW, which has
already sold 10,000 trucks, is now eye-
ing revenues of Rs1,OOOcrore in FYlO.
After the successful launch of
HCVS, AMW is now planning to foray
into the burgeoning LCV segment.
AMW showcased its LCV at the recent
Auto Expo in Delhi. AMW LCV will be
a 1.5-3 tonne vehicle. This mini truck
will compete with Tata's Ace and Piag-
gio's Ape trucks. Recently, Force
Motors also forayed into this segment
with its new M4.
Till a decade ago, Tata and Ashok
Leyland had a monopoly over the HCV
market in India. However, with a
booming economy and an ever-
expanding road network, foreign play-
ers such as MAN and Volvo as well
as Indian light commercial manufac-
turers like Eicher started eyeing the
rrcv market,
AMW first chose to enter the con-
struction, mining and bulk transport
segment. It launched trucks with maxi-
mum carrying capacities starting from
25 tonnes and 31 tonnes, and going up
to 49 tonnes. "We leveraged on our
low pricing strategy to be able to sell at
least 50,000 trucks a year to reach our
plant's maximum turnover capacity in
the next couple of years," says
Bhuwalka. Of the total trucks sold by
AMW, 70 per cent are utilised in off-
Hard selling
Dr Wilfried Aulbur, managing director
and CEO, Mercedez-Benz India, dis-
misses AMW as coin petition to Mere's
Actros trucks, which are widely used in
mining. "They cannot rival our appli-
cations in mines," he says. "We have
800-plus Actros in over 30 locations
around India. These are high-perfor-
mance vehicles, which need to move
excavated dirt till you hit the coal."
Aulbur sees only Volvo and Scania as
competitors.
Having so far focussed mainly on
tractors and tippers, AMW now plans to
look at the mass haulage market keep-
ing in view the demand from construc-
tion, mining and bulk transportation
segments, which means it would have
to hard sell the trucks to individual
truck owners. "As much as 85 per cent
BUS I N E S SIN D IA • June 14-27, 2010
of mass haulage trucks are owned by
drivers. In order to enter into this
segment, we need to win the hearts of
truck drivers," says Bhuwalka.
"We are confident of building the
AMW brand as the preferred brand of
truckers through initiatives like service
mobile vans, providing options for
vehicle funding, and driver training,"
he adds. The company trains drivers at
its facility in Bhuj before handing their
trucks over to them.
Keeping in mind the needs of indi-
vidual customers, AMW started offer-
ing fully-built vehicles as a one stop
solution rather than selling only the
chassis and leaving the buyers to get
the body built by a third party. AMW
has vertically integrated this business
and created a value proposition for its
customers, as the fully built vehicle can
begin operations and generate revenue
from the date of purchase itself.
AMW offers options to build tip
trailers, skeletal trailers, sideboard trail-
ers, flat bed trailers, pallet carrier trail-
ers, fire tenders and various other
formats that are customised to meet
the needs of different applications. To
attend to truck breakdowns on long
haul trips, AMW has a 24x7 helpline
that attends to any call in two hours.
AMW has also put in place a real-time
vehicle tracking system and mobile
repair and service vans, which can be
summoned by a toll-free call. It also
has 151 service stations across the
country. "We will shortly have 60
other service stations in 15 states.
These will be run by our distributors,"
says Bhuwalka.
Though at present, AMW does not
have an exchange offer to help cus-
tomers migrate to their brand,
Bhuwalka says the proposal is under
consideration. Among the incentives
that AMW offers at present is cashless
insurance.
The price positioning of AMW
trucks - higher than entry-level
domestic trucks, but with petter fea-
tures; and lower than top-tmd· trucks
by international players - has posed a
challenge to competitors. AMW truck
prices are 5-10 per cent more than
entry-level trucks and the same
amount less than top-end trucks. MAN,
which has a plant at Pithampur in
Maharashtra manufacturing 16-tonne
flat-bed trucks and 40- or 49-tonne
Revenue
2006-07 2007-08 2008-09 2009-10
Corporate Reports
tractor trailers, has a commanding
presence in the 40- and 49-tonne cate-
gory. MAN is now focussing on the 16-
and 25-tonners.
MAN products designed for the
Indian market include 16- and 25-
tonne flatbed trucks, 25-tonne tip-
pers, concrete mixers and haulers,
and 40- and 49-tonne trailers for long-
distance haulage. The tippers are
priced at about Rs26 lakh, while the
tractors cost RsI7.7-29.9lakh. With a
full body, they cost Rs40-44 lakh. Its
plant has the capacity to produce
25,000 trucks, but the actual number
they manufacture is less.
AMW prices, however, are much
lower compared to either Volvo or
MAN. The company says its tractors are
designed for higher carriage capacity at
low operational costs and save up to 15
per cent on fuel consumption, while
their tipper comes with bogey suspen-
sion and bigger box body for higher
load-bearing capacity. Bhuwalka
thinks AMW'S price tag of Rs25-30 lakh
is a winner, because it is substantially
lower than that of similar tractor-trail-
ers manufactured by MNCS such as
Volvo, DaimlerChrysler and MAN.
Eicher, which has been a market
leader in the 5-12-tonne category, is
also coming up with 25-tonne tippers,
31-tonne haulers and 40-tonne trail-
ers. With a tie-up with Volvo under
way, the company soon plans to tap
Corporate Reports BUS I N E S SIN 0 IA • June 14-27, 2010

the 49-tonne market, though it will worker gets the equivalent of one ponents market is expected to be in the
not be providing frills like AC cabins. year's wages, though he works for region of $700 billion in 2015 and
"With better road infrastructure only nine months in a completely India is expected to be an important
and the Supreme Court ruling ban on air-conditioned plant. part of this market. The 'Automotive
the overloading of trucks, the demand "These young workers like this Mission Plan' for 2006-16 envisages
for higher tonnage trucks has arrangement of putting in 12 hours a that India will emerge as the destina-
increased tremendously. With the day for nine months, earning what tion of choice in the world for the
AMW Global Truck series, we have they would have earned by putting in design and manufacture of automo-
consolidated our position in the HCV eight hours for 12 months. Thus, in a biles and auto components, with an
segment. The 49-tonne segment is year, they can avail pf three months output level of $145 billion," points
expected to witness high growth, with leave to visit their families back out Bhuwalka.
a potential market size of 3,000-5,000 . home," says Bhuwalka. Plus, he breaks AMW'S auto component unit has a
units per annum. We intend to cap- the time up into three-month stints. manufacturing facility for wheel rims,
ture a very significant market share in For their comfortable stay in an oth- sheet metal starnpings, chassis rolling,
the niche segment of 49 tonnage erwise rural setting near Bhu], AMW fabricated components and crash bar-
vehicles," says Bhuwalka. has built a residential colony, which riers. The facility at Bhuj is the largest
accommodates the 1,030 families of single location manufacturer of wheel
Frugal engineering executives and business associates, For rims in the world, with a capacity of 15
Bhuwalka points out that by adopting top executives, many of who are from million wheel rims comprising 12 mil-
frugal engineering, out-of-box think- the US and Europe, the company has lion passenger car wheels and 3 million
ing and innovation, AMW has gained a taken on lease a resort equipped with a truck wheels.
cost-advantage over the competition. swimming pool, a film-screening audi- The company caters to the growing
For instance, he says, unlike the big torium and about a dozen indepen- demand in domestic and export mar-
players who have a large contingent of dent luxurious residential units kets for OEM as well as replacement
engineers and technicians, AMW has fashioned after round-shaped huts. demand. Says Anand Mimani, CEO,
employed just 75 engineers and 2,000 AMW Auto Component, AMW aspires
II

workers. This, he said, was made possi- Auto components . to be present in all the models of auto-
ble because the company adopted the Even before the first Global Truck mobiles that will be introduced in the
North American model of outsourcing rolled out of the Bhuj facility, AMW country in the next few years. II

all the major components of the truck. had gone ahead with manufacturing AMW Auto Component's client
Taking the oilrig business as its wheel rims and sheet metal panels. portfolio includes General Motors,
model, AMW employs workers on a Seeing the emergence of India as an Maruti Suzuki, Mahindra & Mahindra,
contract basis, paying them on an important source of components for TAFE, Eicher, Sonalika and New Hol-
hourly basis, with .provisions for the automobile industry at a fairly land Tractors, to name a few. It also
putting in overtime. Instead of eight early stage, Bhuwalka had also set up a exports high-speed wheels for trailers
hours, the workers at AMW put in 12 separate unit within the Bhuj facility that are attached to cars and utility
hours a day and are paid for the four for the making of auto components. vehicles in Europe.
hours extra that they put in. Each "The outsourced global auto com- • NACHIKETA DESAI