Srivats Ram, the managing director of Chennai-headquartered Wheels India Ltd, is a fourth generation member of the TVS family. The TVS Group is the largest manufacturer of auto components in the country. The Group companies make many of the parts which go into automobiles all over the world. Wheels India is the largest manufacturer of steel wheels in the country, a position it has held for half a century. The company was set up in 1962, and is the first auto components manufacturing unit to come up within the TVS Group in the sprawling Padi suburb of Chennai. Today, it has plants all over the country, with an annual capacity of 16 million wheels.
The company, whose fortunes are tied with the automobile industry, has faced rather grim times in the last few years due to the downturn. This is a business where margins are wafer-thin. However, things seem to be looking up finally. Wheels India reported a 151% jump in net profit for the quarter-ended March 2016—up from R6.76 crore in the same quarter the previous year to R16.97 crore. “Overall, we expect healthier growth this year than seen in the last four years,” says Ram.
Although he is cautiously optimistic, he knows the road ahead is not going to be easy. He has inherited the management of a company which needs to reinvent itself in many ways. Wheels India is one of the stalwarts of the old economy; it has not only survived, but has also maintained its market leadership. However, the last 10 years have been highly disruptive for the auto component industry, especially for those whose major customers were Tata Motors (the then Telco) and Ashok Leyland. The automotive wheels industry is increasingly moving on to global platforms among the multinational vehicle manufacturers, and there is a trend of light-weighting across the industry.
I invite Ram to have breakfast with me before he goes to his factory, to find out how he is dealing with a company which has been with the family for about six decades. We meet at the Spectra, the sea-facing restaurant at the Leela Palace, Chennai. We order continental breakfast, and are served freshly squeezed orange juice and roasted muesli with yoghurt and fruits. I ask for toast with butter and honey. That settled, I ask him about his profits going up this quarter. “Financial results are really about a multitude of factors coming together for your benefit. Profits are dictated by the type of business you are in and the effort you put in. Luck plays a role, as we depend so much on good monsoon and bad monsoon, rupee depreciation and appreciation.”
Ram says his biggest challenge is to change the culture and attitude of people. “One of the issues I see in India is that we are a very much a ‘now’ type of people. Processes take time. We have to keep changing the goalpost. The ability to do this is more important than quarterly results. I look at the challenges before me in three ways. There is a Board I work for that looks at quarterly and annual results and projections for the year. I have my own aspiration of what I want to do for the company. And I have people in the company who have aspirations, but don’t know how to get there. I have to marry these three things, which are not always completely aligned.”
He adds that it requires time to change the culture of a company and align your people to the changes. “Most leaders look at the top management and getting them to adapt. However, building a team is about aligning the cadre of 400-500 people 2-3 levels below. Once that happens, they will go with you, with your goals. That is the challenge. If everyone thinks the same way, you can get things done.”
Typically, companies tend to excite people with growth numbers, profitability, salary increments and so on. But, unfortunately, companies don’t tend to excite people about the great learning possibility that exists. The focus is on results. “If you focus on results, one does not tend to learn. Unless you start learning, how can you make world-class products in India? You need a certain level of depth if you want to deliver global products. That is why we don’t have too many global products from India. We are more a value-for-money kind of country.”
I ask Ram about the growing competition—Wheels India has started facing competition for the first time, with global majors entering the market. “The challenge we have at Wheels India is that because we are market leaders and because there is so much of competition coming in, the ability to increase the share of business is marginal. In an environment which is essentially inflationary albeit at much lower inflation levels in recent years, one needs to grow the company. We have made small bets in areas that require our competence. For example, wind energy is one such area where, from a zero base five years ago, we have grown to a R100 crore business. The ability to grow is significantly more when you start from a zero base.”
Wheels India is possibly one of the most low-key, publicity-shy companies in the TVS Group. It has always been seen as arch-conservative and risk-averse. This is an image Srivats Ram is trying to change.
As our coffee arrives, he shares with me: “We are open to entering new industry segments with basic manufacturing-related commonalities to what we do. Wind and solar power sectors are becoming big in the country. Being in one of these segments will help us grow. There are opportunities for growth, especially if you establish yourself as a quality manufacturing company.”
He adds that the company is sandwiched between two giant industries—automotive on one side and steel on the other. “I understand that the government needs to protect the steel industry and create a level-playing field. There is a point beyond which you should not bail out people who have made mistakes in business at the cost of others. The concern is that if the government continues to do so for a sustained period of time, the competitive advantage the component industry has will slowly go away. There are a lot of opportunities for downstream manufacturing for companies who export products. If you want to keep downstream manufacturing within the country, you need to ensure that the basic raw material is somewhat competitive.”
Ram needs to leave as he wants to avoid traffic on the way to his factory. He is quietly confident that by combining cultural strategy and business strategy, Wheels India will continue to be in leadership position. “We may not be making the same products forever. But we will be leaders in whatever we are doing.”