Dr. Ravi Damodaran,
President, Technology & Strategy, Varroc Group
We are on the verge of signing an agreement with Mekra Lang for commercial vehicles.
How does Varroc Group
connect with the commercial vehicle industry?
At our Aurangabad plant, we manufacture huge crankshafts – forged and machined. We have started small volume supplies to ThyssenKrupp, which is the largest crankshaft maker in the world, for their 6-cylinder engines and also to Cooper Bessemer, which is the biggest stationary engine manufacturer, for both their 4- and 6-cylinder engines. For Indian OEMs like Tata Motors, we are developing crankshafts for 4- and 6-cylinder engines to power M&HCV. We also cater to Meritor, USA. Products like crankshafts require a longer time for development. It is an engine product for which physical prototypes are developed, and sent to engine suppliers who take their own time to test them. The process takes close to 18 months. Apart from crankshaft, we are looking at tracking systems for commercial vehicles. Discussions are on with Tata Motors and Ashok Leyland. These companies have expressed interest, and we are working on the future course of action. Our course of action will be determined by volumes. If volumes are small, then the tracking systems will be serviced by our technology partner Scorpion, UK. Conversely, for significant volumes we will invest, since they do not have the capacity to manufacture here. Once we understand the volumes, we will be able to decide whether we should invest in them, and expand the horizon of the CV market.
Any other developments that you would want to share with us?
We are supplying lights to Eicher for their Pro Series. These are different from those that are found on passenger vehicles or two-wheelers. To be precise, we are well entrenched in the field of passenger vehicle and two-wheeler lighting. When it comes to CV lighting, we have not yet finalised our manufacturing strategy. I think, it is the client’s interest that has forced us to perform. CV lighting is an area of growth. We have the necessary technology. We were reluctant because we have been doing very well in passenger vehicles and two-wheelers. We see a market need. Since we already supply plastics and lights to Eicher, we are also on the verge of signing an agreement with Mekra Lang, a Germany-based company that specialises in mirrors and camera systems for commercial vehicles. Since mirrors are the kind of products we can identify with, we hope the tie-up to be in place soon. The idea is to provide Mekra Lang a manufacturing base in India. The products will be developed in India, in association with the German engineers. Mekra Lang is a supplier to commercial vehicle manufacturers like Volvo, Scania, DAF, MAN, etc. With international CV players finding their way in India, we think of it as a good opportunity. We will get access to CV manufacturers, and Mekra Lang will be able to tap the local customer base where volumes are larger. A new line will be developed at our Pune plant. Once we understand the nature of demand, we will plan the capacity. You could see products rolling out in a year’s time.
Could you tell us about the technologies you have developed?
Some of the products that we make are for powertrain and transmission. These are the ones that highlight our prowess. They have a long validation time and involve huge risks. Light weighting them is something that all our customers look at. Yet no Indian company has approached us for a hollow camshaft, or a hollow connecting rod. It is not possible to develop a hollow component on our own because it has to work in tandem with other components and systems. Often designed to handle heavier components, it needs a re-balance in the system, which requires extensive system engineering. Indian OEs are not equipped for such things whereas foreign OEs can do it. At our technology plants we have already started discussing the development of some hollow products. In the next few months, we will be meeting some of our customers since such an endeavour points at an opportunity. Once they check the product and feel that it is suitable, we will move ahead.
How important it is to work with an OEM from an early stage?
Working with an OEM is not new. It is however confined to certain products. Earlier engine makers did not have suppliers capable of designing a product which was primarily ‘built-to-print’. Now, 90 per cent of the products are. We have thus moved from that stage to being proprietary. The Indian market, when it comes to powertrain components, is not yet at the built-to-print level. Some of the products that are technology intensive – engine management systems for example, are already being co-developed. Such an approach is needed for other components too. It is not that you design a part and the design of other part comes later. If they both come together, the system costs will go down. As a built-to-print manufacturer, we have to wait till the engine valves are designed. We then make the parts. In case of the hollow parts having sodium metal filled in it to conduct heat, we are looking forward to working with OEMs from an early stage. We are already planning to develop such components for lighter vehicles.
Are you 100 per cent built-to-print manufacturer?
Internationally, we are 100 per cent into proprietary design. In India roughly around 23-25 per cent is our own design. Three years back it was lesser than this. In the region of 12 to 15 per cent. Some of the electrical products have been our designs. Going forward, the focus will be on all the segments; we are not segment special, we are product special. For example, why would we pick up engine valves later when compared to an air filter. An engine valve is a more critical component. The effort to validate it is therefore more.
How much business does the CV sector generate for Varroc?
For now, the figure is not too high. We got into crankshafts this year. Their volumes are low. It may be five per cent or less. We however see a considerable increase, in the crankshaft business. It is a high value product.
From where do you see traction coming?
It (traction) not only depends on the OEs but also on the ones that launch premium vehicles. So Daimler and Volvo (both for trucks and buses) are the ones, which will drive value. I am optimistic about infrastructure development. Roads especially. Once roads get better, there will be a huge requirement for higher power engines. Today the light CV makers are low on technology. There will be a need however to develop technologies that ensure better visibility during high speed goods transfer. I am confident that product mix will change towards premium segment. This will drive our growth in the
What is your R&D setup like?
We have nine R&D centres with different capabilities where we employ 600 engineers worldwide. Five of these are in India, and one is in the Czech Republic. It is the largest. Over 2.5 per cent of our revenues are spent on R&D as a group.
Are you planning to put up another division for telematics?
This will be listed under our electrical division. The division already manufactures electrical and electronic products. The production will take place at our Chakan plant. We are in the course of planning out the investments for now.
What will be your target market?
Both the OEMs and the aftermarket will be our targets. We have already initiated discussions with OEs, and the intent is to reach the aftermarket after them. The products will go ‘built’ into the vehicle. In the aftermarket it will be spares if required. Right now the discussion are on as an OE product only.