TK Ramesh, CEO, ACE Micromatic Group
Please take us through the journey of ACE Group…
ACE Micromatic Group is an amalgamation of 11 companies that represent different areas of machine tool industry. This core group was started in between late 70s to early 80s. ACE designers started by B. Machado, AV Sathe and SG Sirgurkar formed a major link for these companies. ACE Designers had a very humble beginning in 1979. The founding members of ACE designers were technically very sound and had worked with each other during their Center for the Advancement of Manufacturing Technology (CMTI) days. They started designing projects for several players, including some established names. I would say it marked the beginning of ACE designers. From 1979 to 1982 the focus was only on designing and nothing went beyond prototypes, but very soon they realised the potential of a CNC machine. It was in 1982, gauging the market demands our founding director decided to take a plunge into manufacturing. That was a turning point.
All the group companies such as Pragati Automation, Micromatic Grinding, ACE Manufacturing System, etc had started independently but since the founding members had a steady professional relationship they joined hands.
During those days importing a machine was not easy, the process included long government procedures and 300% duty among others. Our aim was to make import substitute affordable CNC machine in India. It was a common trend among business houses during the late 70s and early 80s to have technical collaborations with foreign players. But together, our founding members started manufacturing without any external support.
During the late 80s, when Maruti and other Japanese companies entered India, there was a surge in demand for high quality machine tools. Sensing the demand, we started taking feedbacks from customers and accordingly came up with our first CNC lathe. It was later exhibited at IMTEX 1986 and won the best product award. Since then we have won several awards at IMTEX.
We understood that in order to do grow, there should be dedicated focus towards each and every product and process areas of milling, turning, grinding, component manufacturing and marketing, we decided to form different companies focusing on their respective forte. Later this became the ACE Micromatic Group. ACE was dedicated only for turning, AMS for Milling, Micromatic Grinding only for grinding, Micromatic Machine Tools focuses on marketing and Pragati Automation for turret and ATC’s.
By creating separate entities we made sure that every entity gets due attention. It also helped us get right people for specific operations. Totally we are a group consisting of 11 companies, some are product specific while other are service based.
Can you share something about your R&D activities?
When it comes to R&D, mostly it is done together for all the group companies. Together we focus on what needs to be developed next, learn about research activities, practices and training activities. But working on any specific technology is done by individual companies.
For the machine tool industry, 5-6% expenditure on R&D is considered to be good and 10% is considered to be very good. But in India, it’s very low, you can say even below 1%, but we always spend around 2% of our revenue in R&D activities. We undertake some fundamental R&D activities, but most of our R&D or I would call it as D&D (design and development) has been fueled and driven by customer requirement.
ACE Micromatic group has no foreign collaboration or foreign investment but we have been successful in developing machines that are import substitutes. We are proud to say that AMS and ACE Designers have been recognised by Department of Scientific and Industrial Research (DSIR) for its research activities.
How do you train people in your company?
We continuously recruit people from ITI, diploma and engineering institutes; we also have some Phd degree holders in our engineering team. On the training front, we work both on internal training thru our Ace Micromatic Institute of learning and with many external specialists and associations like IMTMA. We have also worked with IISc on joint management program with them. We have also identified senior experts who have rich technical experience; they visit our factory to train our employees. In fact, we have some machines dedicated for training purpose in all our facilities.
You said ACE Micromatic has manufactured several import substitute machines, but when it comes to high-end machines we are still dependent on imports. Can ACE Micromatic compete with the global players, what are your focus areas?
We are very much focussed to make CNC machines affordable for everyone and I can say we have been very successful. I believe, we played a very significant role in making CNC technology affordable. If you look at ACE Group about 60% of our customers come from the SME sector. We sell the highest number of lathe CNC machines in India. The CNC machine that we sell for about Rs 15 lakhs now is cheaper as compared to what people used to buy 15 years ago with less number of features and power. It used to cost anywhere from Rs 20-30 lakhs. That time the price was affected by imports and since the volume was low, cost remained high.
Speaking about making high-end machines, our focus is to make affordable machines for small players which are as good as or at times better than many of the imported machines. And as the demand was less for high-end machines we are mostly present in cost effective CNCs. We are perhaps the manufacturer of the most affordable CNC machines in the world. Having said this, I would also add that we manufacture high-end machines too, but probably out of 4000 machines that we sell only 200 must be high-end. I would like to say again that our strength and forte is in making technology affordable, but we are capable of making high end machine and are very much equipped to compete with other players.
There were established players in the market when you started and today India has attention from various global companies, how do you manage to have such a large share of the market?
We made a decision to help our customers throughout their journey. As I said before, 60% of our customers are SMEs, which could be 10-12 man shop and for them investing in machines worth Rs 15-20 lakh means a lot, so we hand hold all our customers, train them, help them attain productivity. I think it explains why we have the maximum share in the Indian CNC market.
Many believe that only Japanese and Germans can come up with the best technologies in machine tool. Your views on the same…
Yes many believe that Japanese and Germans are the best when it comes to technology and I personally believe that there is nothing wrong in that. But I would also like to look at it in a different way. Need leads to innovation. We all know that earlier India was banned to use several technologies related to nuclear and space, but then we developed these technologies on our own and we are successful. In a similar way after World War II Germans and Japanese worked very hard and developed their manufacturing industry as a result they are the leaders. So talking about mind-set, yes it’s there and its natural, but I feel it will change gradually.
Do you think Asian countries like China, Taiwan and Korea are a threat for Indian companies?
More than China and Taiwan, it’s Korea that can pose as a threat. Korean players like Doosan and Hyundai, who are not only present in machine tool but also in other engineering areas with vast experience in manufacturing. Also, Korea has an added advantage of extremely good infrastructure and government support. They are ahead of us by 20 years in practices and technology. Now, Taiwan is looking to expand through making in China and controlling in Taiwan or with some JVs. But, we feel there might be some threat from Koreans as they are very strong and have huge investments and setup.
The industry-academia partnership has been very successful in developed countries, but it’s still in a nascent stage in India. Your views…
You are very right. It is still in a nascent stage, all these years no one ever talked about it, but now there is awareness and it is getting stronger. Thanks to IMTMA which is very proactive to bring in the positive changes in the industry. Government of India is also very serious about the machine tool industry. The entire machine tool industry could be around Rs 10-12000 crore which might be very insignificant when compared to industries like automotive or textile, which is the biggest reason it is usually over looked. But it is the back bone industry, so I would conclude the need for industry-academia model is fast gaining pace in India.
What are your future plans?
We have made our vision statement that “we want to be among the top ten machine tool producer companies globally by 2020”
To achieve this we will continue to invest in R&D, expand our current facilities and enhance our export. We recently started foundry facility to support our own group companies and also cater to external customers. As said earlier we will also be introducing machines for some complex machining for aerospace and medical industry.
