I N D I A ’ S N O . 1 M A G A Z I N E F O R A U T O M O T I V E N E W S , V I E W S & A N A LY S I S
Auto Monitor
Vol. 12 No. 43
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17 December 2012
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NEW MATERIALS
Pg 12
24 Pages
INTERVIEW MOVING NORTH Pradeep Randhawa, MD, Mann & Hummel Filter Pvt Ltd
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Borgwarner Splits With Vikas Nabeel Khan Jagdev Kalsi New Delhi
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our years after being toget her, US-based auto components major BorgWarner has snapped ties with its Indian partner Vikas Group. The outcome: The US company has set up an independent 100 percent owned subsidiary BorgWarner Emission Systems Limited (BESL). For the purpose, BESL has taken up an 8,000 sq ft plant on lease in Manesar and ready to go into production. A formal inauguration is expected in January. Defending the decision to move on, Sudheer Chawla, COO, BESL, said, “Both of us were not looking at moving on. But a time comes into the life of ventures when interests are different, and one adopts a different line of thinking. So we part ways cordially. We handed back their site to them and have now taken up space at Manesar.” According to Praveen Agarwal,
Chairman of Vikas Group, it was BorgWarner’s decision to establish a 100 percent stake. “We have signed a no-competition agreement with them, so for the moment we will not enter into this product category.” The trends towards an increasing demand for diesel vehicles were also favourable for BESL. This implies a spurt in demand for emission systems where BESL has a major stake. Moreover, the government of India has expanded Bharat Stage –IV emission norms to 17 cities, further expected to go up to over 50 cities by 2015. BESL manufactures emission systems like EGR coolers which are exhaust gas recirculation coolers fitted into the exhaust side of the engine to control NOx. In India it conducts business with almost all large manufacturers. “Maruti Suzuki and Mahindra use our products across all their vehicles. We also have dealings with Tata, Ashok Leyland, Renault, and so on,” said Chawla.
The emission system maker earned revenue of around `45 crore last year and expects to double it this year. “We presume that for the next five years we can maintain a CAGR of 30 percent and if plans work well then achieve a turnover of `400-500 crore in 3-4 years,” said a hopeful Chawla. Initially, BESL will manufacture EGR cooler and EGR tubes and later on add valves. The combination of EGR valves, tubes and cooler makes a fully integrated solution, which goes out as a suitable package to the customer. “We are the only company capable of manufacturing all three products and are ready for Euro-VI business, where we already supply to in other countries,” Chawla asserted. BESL earns 95 percent of the business at this moment from India while confining exports for GM in Thailand and Brazil. Another strategy that the company could follow is to enhance localisation. This is already on the anvil. It is looking at increas-
Sudheer Chawla, COO, BESL
ing localization to 85 percent in the next two years, an increase of 34 percent. This would mean an additional investment of `1015 crore, which it is willing to accede to. BESL also plans to set up a local design and validation centre by end 2014. Currently the validation and testing is conducted at its European plant. “This is
an additional benefit to customers who can witness the testing and validation,” Chawla said. Vikas Group’s JV originally wasn’t with BorgWarner. Vikas had signed a JV with a Spanish company ENSA, which was taken over by BorgWarner in 2010. BorgWarner entered the emission systems business only in 2010 after acquiring ENSA.
M&M Hies For Higher HP Tractors Abhishek Parekh Mumbai
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a hindra & Mahindra’s Farm Equipment Sector (FES) is evaluating developing higher horse power tractors to match up to expectations and standards in North America and Latin America. The American market comprises a major chunk of exports for the company. While tractors of 30 to 45 HP, and maybe even 50 HP and below 20 HP tractors, are acceptable to Indian consumers and neighbouring countries, buyers in North America have already adopted 150 to 250 HP tractors as the demand for higher mechanisation and large land holdings rises. “We need an apt product portfolio for North America to garner sufficient volumes that will justify setting up a manufacturing or assembling
facility there in the medium to long term,” said Bishwambhar Mishra, Chief Executive - Tractor & Farm Mechanization, Farm Equipment Sector of M&M. So far, Mahindra does not have any product for that segment. What it has is tractors in the 85 HP segment in North America essentially for hobby or leisure. Mishra said that in order to be taken as a serious player in the global agricultural equipment segment local assembling or a manufacturing presence may be imperative. The company is a market leader in India in the agricultural equipment segment with combined share of ‘Mahindra’ and ‘Swaraj’ branded tractors in excess of 50 percent. It is looking at being a market leader by offering complete mechanisation solutions based on crop patterns and harvesting seasons. The company’s combined capacity is likely to touch 350,000
Bishwambhar Mishra, Chief Executive - Tractor & Farm Mechanization, Farm Equipment Sector of M&M
units per annum taking into consideration its Hyderabad facility to be commissioned soon. It manufactures around 250,000 units and also exports to neighbouring countries like Sri Lanka, Nepal, and Bangladesh. The domestic tractor segment
grew by around 11.5 percent to around 600,000 units in 2011-12. According to CARE Ratings, the demand for tractors continues to be held back by firm interest rates, extended bout of high inflation affecting investment sentiment of farmers and hike in prices.