Home-grown auto component major Uno Minda group has laid out its PACE strategy to combat the disruption coming from global megatrends such as connected, autonomous, shared and electric. In an exclusive interview with Express Mobility, Nirmal Kumar Minda, Chairman and Managing Director (CMD), Uno Minda said, we are targeting to touch Rs 15000 crore revenue this fiscal year.
Is the Indian auto component industry prepared for the disruption coming from electric vehicles, connected technologies and growing software content in vehicles?
We have had many challenges in the past as well such as the localisation of components of vehicles. Even if we talk about the good old days of the Ambassador and Fiat. We have been evolving ever since then. In 40 years, today we have reached a level of 4 million cars and about 18 million two-wheelers.
I foresee that the passenger vehicle segment will double in the next eight to 10 years. From the current 4 million passenger vehicles sold the segment will double or a little two and a half times about 8 million to 10 million, and maybe 30 million together. So, that’s the size of the industry that will grow in the next decade.
Now, let’s talk about technology. There is no doubt that technologies are changing. We are moving from internal combustion to electric vehicles and now even hybrid. Going forward there will be a mix-up in the segment.
As far as the component industry technology, many R&D centres have been set up and even international companies have been set up. If we talk about software development India is number one in the world.
So it’s a question of application of software and hardware and making end-to-end solutions. So, we are all working, not only us, but I think many many players are working already to provide end-to-end solutions localisations. The government of India is already giving incentives on one side of the FAME-II and PLI schemes. But on the other side, they are also, you know, pushing the industry for localisation and making India Atmanirbar.
I don’t see any gap in terms of technologies, or players, the international players are already started investing. So either they will work or the Indian auto component industry by themselves will work. As in our case, we are working on our technologies. In our R&D centre, we have almost 1300 engineers working. There was a gap in technologies in the case of lighting with us. We acquired a German lighting company. So, I think if there is a will, there is a way I put it this way.
What are your areas of focus when it comes to new technologies such as electric vehicles and connected technologies?
As a focus, we are working around the PACE strategy. P is for personalisation, A is for ADAS, C is for Connected and E is for electrification.
We are working on all four fronts to develop solutions and components. We are also aggressively working on the two-wheeler segment. We have a joint venture with FRIWO to supply EV products to Bajaj, Ather and TVs. Our target is to become the dominant player in the two and three-wheeler segment with a 25 percent market share over some time.
For the four-wheelers segment, we are scouting for partners in the powertrain domain to get easy access to the segment.
What are your revenue targets for this fiscal year?
We have clocked Rs 11,000 crore last year. And this year, we are expected to touch Rs 15,000 crore as a group at the current pace of growth of the industry. And going forward as I told you that we wanted to grow 1.5x from the of the industry.
What is the average R&D spend of auto component companies in India?
It is a chicken and egg story. In a business, there is a top line (Revenues), and then you have a bottom line (profits). You have to invest in R&D from the bottom line. Earlier there was a tax incentive of 200 percent under 50 percent and now it is gone since last year. So to invest in R&D you have to make money first.
You have to make a profit, then only you can invest. You can say that I’m spending a turnover of 3 percent. You may compromise on your profit sometime. But you cannot compromise and spend R&D because it is linked with the future business acquisition of your future business.
Tell us about how the pandemic has been for you and how you see the next three-four years for the auto component business.
We have been growing at a very fast pace and the reason is that we have been increasing our kit value in each segment by adding new technology products by giving them technologies like telematics which is an additional part or additional acquisition of additional customers and with the regulations also like in the sensors, or ADAS, some cameras so different regulations are coming so we get the advantage of the regulations.
So, our kit values are increasing, but our overall target is to, you know, increase our revenue by 1.5x If the industry grows by x.
Mobility as an industry is now moving from a product-based industry to a more service-based one. What do you think about this trend and are you developing solutions to become a service provider for OEMs rather than just being a component supplier?
We are working on two fronts, one is that component to the system as we are already supplying many systems like handlebars and many other systems we supply to the different OEMs though we buy some parts on our own sometimes it is recommended by the OEMs we do supply them to the system. So, they have trust in us and they have an end. It is there we are provisioning systems supplied to the many OEMs. For example, we supply tyre assembly to Maruti Suzuki in Ahmedabad and we provide service wherever it is required. The battery in the aftermarket segment services is required and then we make some brake parts there we need service. So, we have a service department of our own and we are strengthening that service department telematics we do require service. So, as I said an end-to-end solution provider including service.