ASK Automotive: On the growth accelerator

The automotive world revolves around many things, but right at its heart lies safety. And what spells safety more than a reliable braking system? Crafting the perfect brake is not just about mechanics; it is about science, innovation, and exclusive materials. And here is where ASK Automotive has developed cutting edge technology as a result of which the business has been growing steadily over the years.

With 52 special formulations, seven of which were exclusively licensed to them, ASK Automotive has showcased unmatched expertise in creating braking systems. These systems span a broad spectrum: from two-wheelers (both the electric and traditional kind) to three-wheelers, family cars, and heavy-duty commercial vehicles.

However, ASK Automotive’s genius is not limited to brakes. The firm has also ventured deep into making vehicles lighter and smarter at handling heat – two things that modern cars and bikes are looking for. ASK’s Adaptive Light weighting and Precision (ALP) solutions are all about this.

The company produces crucial engine parts, gear components, and even specific items tailored for electric vehicles like battery cases and motor shelters. According to CRISIL, producing these sophisticated parts is a dance of high-tech engineering and close teamwork, especially between part makers like ASK and the big vehicle brands.

“In our realm, it is not just about technology; it is about forging enduring relationships. When we join hands with automotive leaders, they see beyond mere components. They see a future shaped by ASK’s relentless drive for innovation, our passion for precision, and an unwavering bond built on trust and excellence, and an unmatched quality and cutting-edge manufacturing,” says Kuldeep Singh Rathee, chairman and managing director, ASK Automotive.

Building such bonds and partnerships is not a quick affair. Big vehicle brands are meticulous in choosing who they work with. Given the industry’s heavy reliance on cutting-edge technology and machinery, newcomers find it quite a hurdle to make their mark. It is about having the right mix: ample funding, the latest tech, and a team that knows its stuff. ASK has honed this art arduously over the years.

Navigating the two-wheeler terrain

India, with its bustling streets and robust demand for efficient mobility, is home to the world’s largest motorised two-wheeler (2W) market. A report from CRISIL reveals a staggering 13.73 million units sold domestically in Fiscal 2022. “The 2W segment constitutes 77 per cent of the total market comprising 2Ws, 3Ws, PVs, and CVs by volume; and 13 per cent in value terms (R64,200 crore). India is also one of the largest exporters of 2Ws in the world,” says the CRISIL report.

In fact, CRISIL MI&A expects 2W exports from India to record a CAGR of 10-12 per cent between FY22 and FY27, compared with 13.7 per cent between FY17 and FY22. “EVs are gaining in India and are growing faster than ICE vehicles across the 2W, 3W and PV sectors,” adds the report.

In these segments, ASK Automotive has a market share hovering around 50 per cent in Fiscal 2022, and is among India’s largest manufacturer of brake-shoe and AB systems for two-wheelers. This prominence is not restricted to the domestic turf alone; it extends to branded IAM (Independent Aftermarket) segment, underlining the firm’s extensive reach and unparalleled quality.

The company’s portfolio stretches across various segments, including the intricate AB systems, the innovative ALP solutions, and the indispensable SCC products, catering adeptly to the 2W, 3W, PV, and CV sectors. ASK Automotive’s AB systems are integral to vehicle safety, encompassing a wide range of brake shoes, disc brake pads, brake linings, and complete brake assemblies. With the increasing need for effective braking systems due to more powerful vehicles and developments in road infrastructure, ASK Automotive’s products have risen to the occasion and ensure safety while minimising noise pollution.

“We regularly work with OEMs to develop customised products for them, including those which were traditionally produced by them in-house. This enables us to increase wallet share, while simultaneously enabling us to diversify our product basket, offering OEMs with newer solutions for their existing products, thereby also increasing the content per vehicle of our product,” says Prashant Rathee, whole-time director.

The company’s revenue from AB systems recorded a CAGR of 14.32 per cent from Rs816.54 crore in FY21 to Rs1,067.22 crore in FY23, accounting for 41.77 per cent of the total revenue from operations in FY23. In the sphere of light weighting, ASK Automotive is a trailblazer, employing aluminium to enhance vehicle performance, energy efficiency, and safety. The adoption of this lightweight metal has not only resulted in stronger vehicles but also paved the way for ASK Automotive’s successful foray into the EV sector.

“Our endeavour at ASK Automotive has always been to stay ahead of the curve, and our extensive work with aluminium light weighting solutions is an example of this commitment. As we optimise weight without compromising on strength, we aim to set new standards in vehicle performance and safety,” says Rathee.

The ALP segment witnessed a remarkable CAGR growth of 42.41 per cent, rising from Rs489.7 crore in FY21 to Rs993.16 crore in FY23 and represented 38.87 per cent of the company’s revenue from operations in FY23. The SCC product line at ASK Automotive is integral to the seamless operation of various vehicle applications, ranging from brakes to accelerators, and clutches to transmissions. The comprehensive range of control cables manufactured by the company ensures that every vehicle performs optimally.

In terms of revenue, the SCC products segment surged ahead with a CAGR of 42.62 per cent, moving from R43.70 crore in FY21 to R88.8 crore in FY23, contributing to 3.48 per cent of the revenue from operations in FY23.

Forward-thinking manufacturing

With 15 manufacturing facilities strategically placed across five states in India, ASK Automotive ensures that it is perfectly poised to meet the dynamic demands of its diverse clientele. The company’s facilities are a blend of advanced technology and strategic location, ensuring efficiency and reliability in every product that is manufactured.

Diversification is a key element of ASK’s strategic arsenal. While the two-wheeler segment remains a stronghold, the company is expanding its footprint into the three-wheeler, passenger vehicle, and commercial vehicle sectors. In the small car segment, the company’s innovations are already a preferred choice for India’s leading PV manufacturer.

Electrification, a term that is rapidly gaining ground, finds a reliable partner in ASK. With a comprehensive suite of EV and powertrain-agnostic products, ASK was, as of 31 March, 2023, a trusted partner to nine 2W EV OEMs in India. Their focus is not just on meeting current demands but on pioneering solutions that are geared for the future. A strategic shift towards aluminium, aiming at enhanced light weighting and thermal management for e-powertrains, underscores this forward-looking approach.

Moreover, ASK’s expertise is not restricted to the automotive segment. The firm’s Adaptive Lightweighting and Precision (ALP) solutions are finding applications in diverse fields. From All-Terrain Vehicle (ATV) manufacturers like Polaris to power tool giants like Stanley Black & Decker, and outdoor equipment manufacturers like MTD Products, ASK’s innovation is making a mark.

ASK Automotive’s impressive customer portfolio speaks volumes about the company’s credibility and its paramount position in the automotive components sector. Catering to a wide spectrum of clients, ASK Automotive’s products are integral to numerous vehicle manufacturers and automotive component producers, attesting to the company’s versatility and excellence in manufacturing.

Building strong partnerships

A key aspect of ASK Automotive’s success lies in its formidable network of clients, spanning across various segments of the automotive industry. From 2W ICE OEMs such as HMSI, Hero MotoCorp, TVS, Suzuki, Bajaj, Yamaha, and Royal Enfield, to the emerging 2W EV OEMs like Ather and Hero MotoCorp, ASK Automotive has established strong ties with major players in the industry.

The company’s presence in the 3W ICE segment, with OEMs like Bajaj, and collaborations with automotive component manufacturers like Denso, Brembo, and Knorr Bremse Systems, further highlight its extensive reach and reliability as a supplier.

“Each partnership we forge is a step towards innovation and excellence. Our diverse customer base shows our ability to adapt and deliver products that meet the highest standards of quality and performance,” notes Kuldeep.

Non-automotive OEMs such as Stanley Black & Decker, Polaris, and MTD Products also find a place in ASK Automotive’s esteemed clientele, showcasing the company’s versatility beyond the automotive domain.

The company also has a robust network of 468 dealers in India as of 31 March, 2023. In fact, ASK Automotive is well-positioned to cater to the Independent Aftermarket (IAM) segment, supplying a variety of components including brake shoes, disc brake pads, and control cables for two-wheelers and three-wheelers. This extensive dealer network plays a pivotal role in ensuring that ASK Automotive’s products are easily accessible, maintaining a strong market presence.

ASK Automotive’s influence extends beyond the Indian subcontinent, with a diversified customer base in 12 other countries across North America, Latin America, Europe, and Asia. Moreover, the company’s JV, AFFPL, has made its mark in 42 countries across the globe, showcasing ASK Automotive’s ability to navigate diverse markets and establish a global presence. In FY23, the company’s export revenue stood at Rs92.9 crore underlining ASK Automotive’s growing influence in international markets.

R&D: The heartbeat of ASK

ASK’s R&D operations paint a picture of meticulous innovation. The pioneering, proprietary formulations steeped in advanced material engineering like gluing, etc, ensure the company stands poised to meet the exacting standards set by its clients. “Our in-house R&D, design, and manufacturing capabilities are the backbone of ASK. They empower us to transcend traditional boundaries, anticipate market transitions, and craft the future of automotive solutions,” says Kuldeep.

The company’s staff comprise a formidable assembly of 330 engineering graduates, with 74 dedicated full-time members powering the R&D and engineering departments. This cohort represents the company’s emphasis on technical prowess, with these engineers making up over 22 per cent of ASK’s non-shop-floor personnel.

Beyond numbers, it’s the tangible impact of ASK’s R&D efforts that truly stands out. With a portfolio of 52 proprietary formulations designed for the production of diverse AB systems, ASK meets the high bars of safety, durability, and performance demanded by both Electric Vehicle (EV) and Internal Combustion Engine (ICE) Original Equipment Manufacturers (OEMs).

Through the innovative use of advanced data logger systems and dynamometers, the company actively tracks real-time data, ensuring their formulations and systems evolve in lockstep with customer specifications.

Extending this R&D expertise to ALP solutions, ASK showcases the capability to design and prototype intricate components, meeting all safety and performance benchmarks. This prowess not only results in exceptional products but also fosters import substitution, encouraging domestic production and reducing reliance on imports.

As ASK Automotive looks to the future, there’s a clear roadmap in place. With plans to roll out dedicated solutions for 71 automotive programs and 12 non-automotive programs in Fiscal 2024, as outlined in their client agreements, the trajectory for ASK is set firmly on growth, innovation, and industry leadership.

One can see this in how ASK has been inventing bespoke solutions for its clients. For example, the traditional transmission system within these drivetrains has relied heavily on sintered steel geared pulleys, components that, while integral to power transfer, also bring with them a considerable weight. ASK Automotive identified this as a challenge.

The heavier sintered steel not only weighed down the vehicle but also played a role in diminishing its overall efficiency. This called for an innovative solution, a call that ASK’s in-house engineering and R&D teams were more than ready to answer. The team unveiled an innovative solution: aluminium-geared pulleys designed specifically for 2W EV drivetrains. This wasn’t just a simple replacement; it was a transformation. The new lightweight aluminium-geared pulley maintained the required strength and precision, all while enhancing the drivetrain’s efficiency.

The results spoke volumes. With the new aluminium geared pulleys in place, the company was able to do away with subsequent machining processes previously necessary for the steel sintered pulleys. It was a win for efficiency, a win for innovation, and a significant step forward in the EV drivetrain segment.

The safety of riders and vehicles stands at the forefront of ASK Automotive’s mission. This commitment was put to the test when addressing the conventional use of plastics in EV battery pack housings – a material known for its vulnerability to thermal runaway and potential fire incidents. The challenge was clear, and so was ASK’s response. Leveraging their strong in-house design and simulation capabilities, the team developed a lightweight, thin cross-section aluminium battery pack housing, effectively replacing the highly inflammable plastic material.

This development marked a significant breakthrough, not just in terms of material use but also in enhancing the overall safety of the vehicle. The introduction of aluminium as a base material led to a substantial increase in the strength, reliability, and safety of the battery pack housings, setting a new standard in the industry.

“The core philosophy of our company is continued focus on driving operational excellence, which we have achieved by way of continuous development and improvement of our manufacturing processes and QCD parameters. As a manufacturing company, we continue to strive to achieve higher operational efficiencies and cost optimisation, developing long-standing relationships with our OEM customers,” says Kuldeep.

Expanding horizons

ASK Automotive is at the cusp of a new era, aiming to further diversify its product offerings in AB systems and ALP solutions, and consequently, expand its addressable market. With a robust foundation built on established and long-standing customer relationships, the company is poised to explore and seize growth opportunities across various sectors, products, and processes.

The journey from providing safety systems and critical engineering solutions exclusively for 2W OEMs to extending these offerings to PV OEMs has marked a significant stride in ASK’s growth trajectory. The next phase of expansion is characterised by an ambitious foray into new sectors. This sector diversification is not just a quantitative increase in offerings but also a qualitative enhancement, utilising the company’s manufacturing capabilities to cater to diverse needs across industries.

Having established a dominant presence in AB systems and significantly scaled its ALP solutions, ASK Automotive is now set to elevate the complexity and specialisation of its offerings. This involves a strategic shift towards producing more complex precision components for a global clientele, reflecting the company’s evolution in technological capabilities.

With new manufacturing facilities on the horizon in Bhiwadi, Rajasthan, the company is expanding its capabilities to include Low Pressure Die-Casting (LPDC) and Gravity Die-Casting (GDC), in addition to its existing High-Pressure Die-Casting (HPDC) capabilities.

 Strong financial growth

No surprise, in the fast-paced world of business, demonstrating consistent growth is crucial, and ASK has done just that. Its revenue from operations surged at a remarkable CAGR (compounded annual growth rate) of 28.64 per cent between FY21 and FY23. A closer look at the financial data from these pivotal years paints a vivid picture of its growth trajectory. In FY23, ASK’s revenue from operations reached Rs2555.16 crore, a substantial increase from Rs2013.08 crore in FY22. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) also showed a strong performance increasing to Rs247.5 crore in FY23 from Rs210 crore in FY21. The firm’s return on average capital employed (RoACE), a key indicator of profitability and efficiency, stood strong at 22.06 per cent in FY23, showing a notable improvement from 16.76 per cent in FY22.

The firm has also been steadily increasing its operational efficiency which is further highlighted by its working capital days, a crucial measure of how quickly it is converting its working capital into revenue. In FY23, ASK achieved a working capital cycle of 27.74 days a commendable improvement from the 28.82 days in Fiscal 2021. This stellar financial performance lays a solid foundation for future expansions and diversifications, positioning the firm to broaden its customer base and enhance its product offerings.

Global opportunities

With a keen eye on the global market, ASK Automotive is strategising to leverage existing customer relationships outside India, focusing on increasing export revenues for its AB systems and ALP solutions. The company has shown commendable growth in export revenue, with a CAGR of 29.95 per cent from Fiscal 2021 to Fiscal 2023.

A pivotal component of ASK’s growth strategy is the expansion of its distribution network to deliver a wide array of technologically advanced, critically engineered products for the Independent Aftermarket (IAM) across India. This involves strengthening its presence in the 2W, 3W, and PV sectors, as well as the CV sector through its Joint Venture, AFFPL.

Revenue from IAM has grown at a CAGR of 9.15 per cent from Fiscal 2021 to Fiscal 2023, a trend it is keen on maintaining and accelerating. The focus on IAM sales service is strategic, aiming to capitalise on substantial growth opportunities in the future.

The company is set on a trajectory to expand its IAM presence, enhance its brand positioning, and seize additional market share. Leveraging its leadership in the OEM and OES market for 2W AB systems, along with its renowned brand recall and extensive global distribution network, ASK is well-positioned to swiftly penetrate new markets and sectors within the IAM for its AB systems and SCC products.

“In the journey ahead, our initiatives will encompass increasing product penetration through the introduction of new products and models by OEMs and expanding our distribution network in India,” says Kuldeep Rathee, encapsulating the strategic vision for sustained growth and market leadership of ASK Automotive.

Strategic expansion

ASK Automotive is on an unwavering trajectory of growth and innovation, consistently enhancing its manufacturing capabilities to meet the rising demands of the automotive industry. The company is set to amplify its production prowess with the introduction of new manufacturing facilities in Bhiwadi, Rajasthan, and Kolar, Karnataka, marking a milestone in its journey.

At the heart of ASK Automotive’s expansion plan is the establishment of a state-of-the-art manufacturing facility in Bhiwadi, Rajasthan. Positioned strategically at Riico Industrial Area, Karoli, this new facility is envisioned to be a powerhouse of production, dedicated to churning out a vast array of products across all business operations – be they AB systems, ALP solutions, or SCC products.

Underscoring the company’s forward-thinking approach, the Bhiwadi facility will also house paint shops, both liquid and powder, introducing an additional layer of finesse to the products. ASK Automotive is also set to integrate low-pressure die-casting and gravity die-casting processes, marking a significant advancement in the company’s manufacturing techniques.

Parallelly, ASK Automotive is laying the groundwork for another manufacturing facility in Kolar, Karnataka, having been allotted 6.00 acres of prime land by the Karnataka Industrial Areas Development Board. A substantial investment of R17 crore has already been invested in the project.

In an era marked by rapid advancements and a relentless pursuit of excellence, ASK Automotives is making a move to redefine its market position not only to unlock value for but also bring in new stakeholders in its growth story. The firm is making an offer for sale of equity shares through a public offer. The firm is not making any fresh equity as it is sufficiently well-capitalised to fund its growth, as it is generating high free cash flow. In fact, as its expansions gain market traction, the cash flows are only expected to increase, going by the way business is growing.

“Our revenue from operations has grown at a CAGR of 28.64 per cent between Fiscals 2021 and 2023, demonstrating growth in our financial performance in recent years, and positioning us for future growth and further diversification of our customer base and offerings,” says Naresh Kumar, chief financial officer.

Needless to say, in the high-octane world of automotive manufacturing, ASK Automotive has carved out a niche for itself, setting new benchmarks in quality and innovation. The company’s unwavering commitment to excellence is not just a business strategy, but a holistic philosophy that permeates every layer of its operations. With a relentless pursuit of perfection, ASK has honed its manufacturing processes to a fine edge, consistently pushing the boundaries of what is possible.

“The core philosophy of ASK is continued focus on driving operational excellence, which we have achieved by way of continuous development and improvement of our manufacturing processes and QCD parameters. As a manufacturing company, we continue to strive to achieve higher operational efficiencies and cost optimisation, developing long-standing relationships with our OEM customers,” says Kuldeep Rathee. That will drive the company’s growth by leaps and bounds in the coming years.