B S Arora, General Manager Business Development, Songz

Pollution is becoming a big issue, and hybrid and electric air-conditioners can address it.

What is your take on economic growth, the CV sector growth and issue like the implementation of Bus Code?

Everybody is hoping that 2015 would be a very good year. Lets see how it goes since as of now I think we are yet to have a definitive answer. The bus code implementation will be good. It will keep unorganised bus body builders in check. New players and global entities will come in. With these unorganised body builders gone, issues like better designing, safety and comfort will be taken care of. Commuters will be more aggressive and price will also become a major issue
going forward.

Under JnNURM 2, most OEMs will be supplying buses to various STUs. How do see it in terms of growth?

Everybody enjoys aftermarket business better than the OEM business. Working with aftermarket players is better than working with STUs. There’s money to be had in the aftermarket; there’s also volume and less problems.

Songz is focusing on the aftermarket more than OEMs – it is easier to get into, but, don’t you think payments are tough?

We have to deal with typical fabricators. The North Indian market is ruthless when compared to South and East. We have ground to cover and the competition is fierce.

What is the company’s current product mix?

We have not started on our product mix yet. We are building a support network in India. We will step into the market by the middle of 2015. In case of dealers or application engineers, we have seen companies trying their best to work with dealers. We don’t want to go through it. By the end of 2015, everything hopefully will fall in place for us.

Would you have found a place in the OE market by then?

We are trying to get into the OE business, but for now we don’t have a formidable business to speak of. We have not been aggressive on the OE front as of now, but, have been expanding in both the directions of the market in India. We are also in the process of developing an after sales support network. When we start a manufacturing facility in India, it will involve the transfer of technology. Technology transfer to India for manufacturing will lead to cost savings. Production costs in China are going up.

Songz is a big player in China?

In China we are the biggest manufacturer of bus air conditioners. We have every type of air-conditioner there, and India will be gradually taking that route. A route, which will include hybrid and electric air-cons. Pollution is becoming a big issue, and the hybrid and electric air-conditioners can address it. We have already offered our hybrid and electric air-conditioners to two OEs. The concept of such air-conditioners is very new in this country, primarily for buses. Whether it is a truck or bus, much depends on the service network and the support system.

Are you looking at a manufacturing facility in India? With an R&D or application centre to support it, which will allow you to tap other segments?

We are looking at making conventional air-conditioners in India. Special air-conditioners will come from China. They require a lot of expertise. Only the conventional ones will be manufactured here. Also, for mining industry and some construction equipment too. For them, duty cycles and hours are very demanding. They seek a little comfort. It will take us about two years to start a facility. Till then we will be developing the support system.

Will mining and construction equipment be a small part?

Yes, it will be a small part of our business since they don’t have decent margins and volumes to operate. It is very unlike the bus air-conditioning segment.

Tell us about electric and hybrid air-conditioners. How will the Indian market find it useful?

Cost is an important factor in India. Our air-conditioner is a hybrid model, whose cooling capacity can be increased or decreased depending upon
the environment and
customer needs.

So the compressor does not work off the engine, and works on its own?

It has its own electric power generation system and does not take power from the battery or the bus alternator. The Supreme court has asked OEs to comply with Euro 5 and Euro 6 emission norms. This may control pollution but will lead to increased costs. Electric air-conditioning systems can address pollution concerns.

As a Chinese company, do you face any disadvantage? People think they come cheap and are of an inferior quality.

That was the case two-to-three years ago, however it is not so anymore. The customer today wants quality for the price he pays. Price is a challenge. There are some local manufacturing companies who drastically drop their prices, and that is the only challenge that we are facing right now. A manufacturing facility will certainly help in addressing this problem. The government has not been able to do things to make the Rupee stronger. Infrastructural reforms would make things better for the CV sector. Still, the Dollar price is too high. It amounts to a big disadvantage for us as we are still importing air conditioners. Custom duty is calculated on the invoice value. It has a triple effect due to freight charges, and leads to 15-20 per cent higher costs than that of
the competition.

Have you started any efforts to localise the ACs.

There are only two or three compressor manufacturers in the world for automobiles. We are the largest manufacturers of bus air conditioners in the world. We have ten manufacturing plants in China. We manufacture passenger car air conditioners to deliver just-in-time to manufacturers. We do 40,000 units per annum for buses. All the compressor manufacturers have given us a special price. We supply one-lakh units for passenger cars. In phase 1, we will be focusing on CV and then moving forward. We will thus get to the car segment in
phase 2.

Do you also cater to the refrigerated trucks and special application vehicles. What is the difference in terms of requirements?

Truck refrigeration is a growing market. 40 to 45 per cent of food produce is wasted in India for the want of proper infrastructure and logistics. India is the largest country to export meat products. Exports of meat products can increase by 30 per cent if proper infrastructure is provided. Over the next four years, refer trucks should double. Presently, only 3,000 units per annum are sold in India. Other markets are
far bigger.

Given your reach, which other market segments will you look at?

We have identified the products we should offer, for the commercial vehicles as well as the passenger vehicles segment. We look forward to supplying air conditioners to Maruti Suzuki since we already supplying
to Suzuki.

Bus air-conditioners are a different ball game altogether?

There have been companies who have limited their exposure to OEs. With the OE business having gone down, their business has gone down too. The bus air-conditioning market has reached a stage where there is a need to highlight technological prowess. It also needs to be considered that bus air conditioners are subject to road conditions, trained technicians, and operating conditions apart from the parking conditions. The bus, whether it is running or standing still, has to bear the effect of direct sun light, which has an impact on the components of air conditioners.

What feedback do you send to China so that the products supplied here meet
the challenges?

Based on the feedback we give, the components of the air conditioners are made as per Indian requirements. For example, the air-con hose pipes are such that they meet the Indian requirements.

Bus manufactures are experimenting with different platforms. Safety and comfort plays a greater role now, along with AMTs for better 

fuel efficiency. How do you see these technologies making a difference as an air-conditioner manufacturer?

AMT is good for petrol cars, whereas it is not good for diesel cars. Failure of clutch due to a sudden increase in the RPM of an engine led to the failure of compressor clutch. The clutch supplier was called. Compressor was redesigned such that it was able to work under ‘off-load’ conditions.

Telematics is gathering pace in India. Does it connect with air conditioners?

Data loggers can be used to analyse how air-conditioners perform over a journey. Sometimes drivers tend to switch off air-conditioners to save diesel. Pharma companies use data loggers in refer trucks to ensure that their shipments are in good shape. Temperature is a very important factor for them and they insist on putting a data logger inside the refrigeration truck based on which they accept the shipment. We expect data loggers to find use in the transportation of other perishable goods, including perishable food.