As the governments around the world push for cleaner means of people and goods transport, there is much focus on electric vehicles. Automotive parts and components providers have had to diversify their product lineup to cater to such shifts. We got in touch with Harsha Kadam, MD & CEO, Schaeffler India, to know more about the brand’s key products launched recently for the EV segment, learn about what the company opines about the popularity of EVs and the government’s response to providing assistance to manufacturers, and also about Schaeffler’s contribution to India’s automotive industry.
Are Schaeffler’s engine components used by an Indian manufacturer?
As one of the leading suppliers of automotive products and systems, Schaeffler India supplies engine, chassis, and transmission products to the country’s top five OEMs. Our customer-centric approach, high emphasis on innovation, and superior distribution network enable us to maintain our leading position across these businesses. We aim to provide class-leading reliability and safety through our products, and we will continue to focus on providing innovative products and solutions driven by superior technology. Our Engine components are designed to contribute to the needs of the stringent norms such as the BSIV to BSVI as well as the oncoming CAFÉ norms.
Any fresh dose of investment has been done recently? Please share details of future investments in India
Since 2017, Schaeffler has doubled its investments in India to the tune of INR 2500 -3000 Million per annum. We have and will continue to enhance our capacities and competencies for the future. Most recently we have announced an increase in capital expenditure (Capex) by 20% to INR 1,200 crore over the next three years.
At the India level, we spend 1 to 1.5% of our earnings on R&D and will continue to do so as we believe, that is an investment for the future and is extremely important for any technology company. To further leverage local competency, infrastructure, and networks, we have established an Incubator Competency Centre at the Pune plant for two-wheelers and agriculture machinery where we are working on several innovative projects. We also have a dedicated 2W & 3W R&D facility at Pune and have continued to enhance its competencies by adding testing and simulation capabilities. This has helped us to develop innovative products locally and serve local customer needs.
On the manufacturing front, we have most recently expanded our manufacturing capability at the Savli unit in Vadodara. The plant largely caters to our industrial clients. On the automotive front, we have a strong focus on localization and continue to expand our localized portfolio. In line with this our localization ratio has improved to 76% in 2020. In the future, we plans to keep the highly skill-based critical operations to itself while outsourcing the non-core operations to external agencies.
Any new innovations or components that the company has made recently and that might disrupt the Indian automotive scene? Please elaborate on export numbers too.
R&D and innovation form an integral part of our growth strategy. It has been our constant effort to develop and strengthen local R&D capabilities and hence we have invested over INR 2,500 Million in R&D in India in the last five years. As informed in previous response, we have a dedicated R&D center – in Pune and have enhanced our testing and validation capabilities through in-house test rigs and simulation facilities. Few key products launched in 2020 are:
1. An automatic two-speed transmission for electric three-wheelers and are engaged with major OEMs for its implementation.
2. Advanced wheel bearings for new platforms of OEMs
3. New valve train, timing drive and water pump components to major OEMs
4. On Board Condition Monitoring systems developed in house for the Railway and other sectors.
Our strategic location in the Asia Pacific allows us to further serve the growing SE Asian markets translating to greater scope for business expansion. In line with this, we have a clear export strategy, following which our 2020 revenue mix consisted of 10% revenue from exports. Our exports largely cater to the entire APAC region and are a mix of industrial & automotive products.
With EVs coming in, what is Schaeffler’s contribution and what all components are being made for the same. What are the challenges vis-a-vis making components/parts for EVs.
Owing to reasons like increasing pollution, dependence on oil imports, dire need to have more renewable sources of energy etc. the entry of electric vehicles is inevitable in India. And though, the EV Segment has gained momentum in the Indian market, it is still in a nascent stage.
For the EV segment to become more sustainable, it would need volumes, and we view Light Commercial Vehicles (LCVs), 2W & 3W as prime volume drivers for the segment. Therefore, Schaeffler India has indigenously developed a twin-speed seamless transmission that is compact and modular, innovative, and fit to market for emerging markets.
In the case of Passenger Vehicles (PV), our observation is that customers are expecting EV performance at par with IC engine powered vehicles, which places unique demands on the electric powertrain. Our patented twin-speed transmission system has been developed to manage these demands. TwinTrans aims to achieve both grade ability performance and higher top speed without increasing the load on the motor and battery capacity. This one-of-its-kind system is an automatic transmission system that enables the vehicle to draw the essential torque and maintain speed while climbing on a gradient.
With regards to challenges, I feel that at a policy level the long-term roadmap for EVs needs more clarity. This will in turn help OEMs to firm up their strategy of either choosing a straight jump to EVs or using alternate technology such as hybrid to enter the market.
How has the pandemic affected you (spokesperson) as well as the company. For the latter, we are looking on details about production capacity, constraints, and new office practices.
The crisis has truly brought the entire Schaeffler India team together. The morale and motivation of our employees have been highly commendable. Across all levels, right from the senior leadership to the junior-most employee, everyone has shown tremendous resilience and agility in quickly adapting to the new normal and ensuring business continuity and safe restart of our plants, warehouses, and offices, amidst this pandemic and its challenges. The resilience and tenacity with which the entire Schaeffler team rallied together to work as one cohesive force showed an altogether new level of organizational bonding. Empowering and trusting each other has been our strength in overcoming the crisis. With a strong focus on innovation, agility, and quality, we have managed to keep the ball rolling even in these unprecedented circumstances.
During lockdown in the first Covid wave, we lost almost 52 days of production in the Wave 1, as the economy came to a grinding halt. But as the economy opened and demand cropped up, we gradually increased the production and all our plants started working at full capacity. Though onset of the second wave has dampened the demand a bit, but we were prepared and were not affected/impacted as much as during the first wave. As the pace of vaccination increases and the Covid wave diminishes, we are hopeful of a positive recovery.
The unprecedented challenge that we faced during the Covid lockdown period gave us enough time and scope to prepare and re-tool for the new normal that we were heading into. In line with our crisis preparation, we adopted the ‘Protect, Recover, Retool’ approach, and directed our efforts to first protecting the health and well-being of our employees and our facilities. The next step was to restart activities safely and cautiously. And finally, retool and prepare for tomorrow. Amidst all this, customer centricity has been of utmost importance to us and we continued to remain closely engaged with our customers at all times. Here, our capability to predict and forecast the fast-changing customer needs, our mental preparedness towards the impending changes and our agility in responding to the change ahead helped us to stand in good stead.
How well have the TruPower product range been received by the target audience? Do products like grease or engine oil require specific changes to be BS6 compliant? Can these BS6 compliant lubricants be used in BS3 or BS4 vehicles?
Since the launch of TruPower, we have seen very good growth. The results in terms of uptake and response have been very encouraging. As one of the leading suppliers of products and systems that help reduce CO2 emissions and protect the environment, we hope to play a proactive role in ensuring a smooth ‘BS-IV to the BS-VI’ transition of India’s automotive industry. We have an excellent mix of old generation BSIV products and new generation BSVI products – for the whole powertrain, engine, and chassis. We have continuously made strategic investments and acquisitions which enable us to be a valuable business partner to our customers. Yes, the new emission technology requires higher engine operating temperatures which necessitate lubricants with enhanced performance properties. Hence, the BS6 compliant vehicles would need lubricants that are BS6 compliant as well. Most Schaeffler TruPower lubricants are backward compatible with BS4 vehicles.
What do you feel about the EV culture in India? Please share your thoughts.
India is witnessing a gradual increase in EV adoption and the government is also on the right path of developing of required infrastructure to support EVs. However, we need an ecosystem approach to achieve India’s progress on electric mobility. In India’s context, we feel that LCVs, 2W & 3W will be the first adopters of electric vehicles and will in turn drive volume in this segment. Having said that, we also estimate that, ICE (Internal Combustion Engine) technology will be around for the foreseeable future and may also be combined with electric or hybrid drives. This coupled with the country’s strong auto parts ecosystem will lead to the creation of a sophisticated spare parts market that will cater to the needs of these vehicles in upcoming years.