Av Tec Cover Report Sep 2012

The pulse of the automotive industry Vol-2 / Issue-12 / September 2012 / `100/-

www.motownindia.com

avtec Ltd.engineering Powerhouse

PLUS Tte--tte: Nalin Kapoor, Sr. GM & Group Head Marketing, Hyundai Motor India Tte--tte: Pter Bolesza, Vice President, EEU & Emerging Markets at Nav N Go Kft.Technology spotlight : self-driving vehicles

ZF-EcoLife transmission set to improve Indian city bus mobility

25 years of front passenger airbag from Mercedes

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anand targets 1000cr aftermarket business

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Reva NXR electric car by Sept-end 2012

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countdown begins for automechanika show

Pages 54-55

Prabhakar Kadapa, CEO, Avtec Ltd.

Cover report Cover report

Motown India / September 2012 23www.motownindia.com www.motownindia.com September 2012 / Motown India 22

Engineering powerhouseReport: P.Tharyan & Cover photography: Mohd. Nasir

Whether it is the blazing tracks of F1 circuits or the congested roads of New Delhi, driving a car needs tremendous skills and high levels of concentration. The cars, in turn, need to have sound engines and efficient gear boxes, without which neither a car nor its driver can make any progress. It is here that companies like Avtec Ltd painstakingly make our world more efficient and worthy. Avtec, part of the CK Birla group of companies, is Indias leading manufacturer of engines and transmissions. Whether it is a gear box for a small car or a huge truck, Avtec makes it all. Their forte goes beyond this.

Having acquired Assag, a Switzerland-based engineering company sometime back, Avtec is looking at both inorganic and organic

routes to surge ahead. In the current fiscal it hopes to generate total gross revenue of 920 crore. The company has plans to become a

2,500 crore company in five years time. The company which started business with

its own group company Hindustan Motors, has progressively moved forward in the last several years. The gearbox and engine for the HM Winner LCV is supplied by Avtec. The GM Tavera BS III engine and gearbox are supplied by Avtec. The company is working on a BSIV engine for its customers . Ford India cars including the hot selling Figo car today runs on gear boxes assembled by Avtec. Avtec supplies certain components to Mahindra & Mahindra which go into the Bolero and Scorpio. For the Tata Nano, the company makes all the gear elements. While Avtec supplies the parts for the Nano, Tata Motors

company assembles the gear box. Avtec also supplies parts to Tata Prima, the world truck. It supplies transmission parts as well as axle parts.

Leading engine and transmissions manufacturerAvtec is today a leading manufacturer of engines and transmission for automobiles. In the off highway segment too it offers its transmissions. Off highways include the sectors of mining construction, oil field applications, railways, etc. The company has drawn up plans to enter the area of industrial gears. Industrial gears are used in the industries of steel, cement, processing and power, to name a few. While components are another area it has identified, the company has made inroads into manufacturing gensets. The gensets are being manufactured with EFFICA brand name. It is for the first time in India that a company is manufacturing gas gensets that can run on multiple fuels, which clearly demonstrates Avtecs technological superiority.

Most of its customers are global players. Back home it supplies engines and transmissions to GM, Ford, Tata Motors and Mahindra, Ashok Leyland Nissan, Allison Transmissions and Daimler, among others. The company is supplying three products to Daimler. Avtec supplies engines for light duty trucks below 12 tonnes. For Bharat Benz trucks above 25 tonnes, the company is supplying a part of the axle assembly. The company is working with them on some interesting assignments. For off-highway, the

company supplies to the likes of Caterpillar, BEML etc.

Assag, the recently acquired Swiss company today has a turnover of 100 crore approximately and employs roughly 50 people. There is more to come, says Prabhakar Kadapa, Chief Executive Officer of Avtec Ltd. In an exclusive interview with Motown India, Kadapa says that his company is exploring both the organic as well as inorganic routes to grow in the coming years. A four-year

strategic growth plan has been drawn with the help of McKinsey, a global consultancy firm.

We have established a footprint in Switzerland. Assag is more of an R&D and prototype development company. In India we do R&D as well as manufacturing. The Assag plant does not do volume production, only small and limited production. We have great synergy with Assag in Europe, he says enthusiastically.

Assag is known for its solution in crown gear differential drive, harmonic drives, planetary drives and pioneer in face gear technology. Assag has a design and assembly

facility in Switzerland and a manufacturing facility in Netherlands.

Kadapa also explains that Assag is into speciality gear cutting process which is called a facegear technology. The difference between normal gears and face gears is that the latter can be moved axially. Aircraft landing gears, for example, experience temperatures as diverse as minus 50 deg C to plus 53 deg C, all in a span of few minutes of being airborne to landing. These parts

are subjected to extreme temperatures, resulting in the clearances between the two meeting gear points shrinking. At this point jamming can take place. Face gear technology ensures that there is no jamming. This has been supplied to A380, the new generation aircraft. Similarly Assag has several patents to its credit, informs Kadapa.

Assag, he says, is a growing company. The company has also designed a key part of the central gear differential in a new Audi car. Assag has always been into very niche applications. The starter motor gears of a Porsche car too were designed by Assag.

The know-how of Assag and the capability of Avtec shall complement each other. This shall reinforce Avtecs commitment to customers as a one-stop solution from concept to design, proto tying and series production. This partnership will bring our customers a better technology, world class quality, on-time delivery at competitive price and in turn make Avtec the first choice supplier for power train and precision engineered products and services, says Kadapa.

Avtec has also tied up with PCM, a division of PSA Peugeot Citroen and are ready to offer Euro IV and Euro V to any automotive

Within the powertrain domain wherever competencies exist we are keen to explore the opportunity.



Prabhakar Kadapa, CEO, Avtec Ltd.



manufacturer in India and abroad. With a couple of OEMs we are doing a feasibility study for another automobile which is not part of PSA or Avtec. We are looking at anyone who wants a third party support. We are ready to offer Euro IV and V engines, he notes.

Recently the company won business with GM Autovaz Russia. This is for a manual gear box for an SUV. We also won business for a 4X4. This is one we are designing and are trying to bring new features in the 4X4 different from what they are having today. This testifies the relationship we have with GM, he says.

Developing five verticalsAvtec has four manufacturing outlets in India. The company manufactures engines and transmission parts for domestic as well as global OEMs. The company has 1,600 people employed at its plants in India of which around 450 are management staff which includes engineers etc. The rest are workers spread over the four factories. While two factories make automotive products (Pithampur and Kharagpur), the other two make off-highway products (Hosur and Chennai).

We are into B2B business as well as B2C business. In the B2B business we do contract manufacturing. The customer sends an RFQ to us we respond to it with a code. Our responsibility is that we take the design, understand the technology then procure the parts and manufacture them. The assembling, testing and warranty etc are our responsibility. In this case the customer takes the lead because the design belongs to him. The second case is that we design and we have a product with us, we go to the customer, and offer them the products to them whether it is A, B or C, and tell them probably it may suit their platform, points out Kadapa.

The gearbox in the Dost LCV being manufactured by Ashok Leyland Nissan venture belongs to Avtec. We approached Ashok Leyland-Nissan with our gearbox. Then they wanted us to test this gearbox against one of their partners. We proved to them our product was equally good. In our line of business we cannot have a completely off-the-shelf product. But an off-

Vertical machining centre Kharagpur plant

Stefan Schoen of Assag with Prabhakar Kadapa



the-shelf product could be a start point. We do reasonable changes if required, so that customer requirements are met. This cuts down the cycle time drastically, notes Kadapa.

Avtec works on products that are likely to be developed by its customers in the long run. Based on this, it approaches its customers with its own products. In several cases it offers them the products it has with it. The OEMs in turn suggest modifications. Thus starts a new business relation with the customer. Some companies do not like to outsource powertrains. Some do, but at the end of the day it depends on the strategy of the customer, he says.

Sixty five per cent of Avtec revenues come from automotive. The remaining 35 comes from off highway sector. The automotive sector includes passenger cars, LCVs, SUVs and HCVs. The company does not make any parts for two and three wheelers.

When we did a strategy study with McKinsey we came out with five verticals. These are automotive, off-highway, components, industrial gears and gensets. Industrial gears are big gears compared to automotive gears and the technology here is different too. The speeds and the torques too are different. They are heavy and weigh anywhere from one tonne to 10 tonnes, says Kadapa.

The genset business is corollary to its existing business of engine manufacturing. We make CNG engines. We make CNG gensets. We will grow as CNG is made available for the public for commercial use. We have a best in class product. We have done a comparison as what is globally available also. Our CNG engine is the best in class. We have exported more than 8,000 pieces to FG Wilson in the past. We have already entered the 30kw range. We want to go up to 120kw. Here there is both a B2B as well as B2C element. We have already done a soft launch in the eastern part of the country. We have set up a regional office in the east and have tapped the markets of West Bengal, Bihar, Odisha and Assam. We want to also tap the markets of Nepal. We have just about initiated sales in Delhi wherein we have sold a few CNG sets as Delhi has got adequate availability of CNG, reveals Kadapa.

In the first quarter of this fiscal the company made its presence in genset business in the eastern part of India. In the second quarter it plans to come to northern part of the country and by next year it plans to enter the markets of west and south India. Its green coloured gensets run on gas---CNG, PNG, LPG and bio gas. The gases have their own calorific values, yet a trained person or technician can ensure that the genset switches on to a different gas, all in a matter of an hour or so. The market for gas run gensets is very limited as this market is dominated by diesel. As CNG

Hosur Plant Component machining

availability improves, the market is expected to shift towards gas based gensets.

Though the company has prepared a four-year strategic growth plan with McKinsey, Kadapa notes that business from the automotive segment would continue to dominate total revenues to the tune of 60pc. Even as the size of the cake increases, automotive would continue to constitute the larger slice of this cake.

The four-year strategyLast year, Avtec recorded gross sales of

750 crore, excluding revenues from overseas operations. This fiscal the company hopes to grow to 920 crore inclusive of overseas operations. In the next five years time, we want to take the company to the half a billion dollar mark ( 2500 crore approximately) in revenues. We also want to become the most preferred powertrain supplier to both Indian and global OEMs. Having these two in mind, we interlaced our business plans. The business plans roll out every year. This is also inclusive of organic and inorganic growth. We did one recently. We are examining a couple of them

closely. These are based overseas. Today we are looking at international companies but we are also open to domestic companies. It could be a company with solid design capability. If they have a manufacturing capability, it would be good. Otherwise we can definitely support them. We have proven credentials in application engineering, product development and manufacturing. So if they have a very good design capability we could probably lend manufacturing support. Or if it is a complete business on its own, it will be completely fine with us. We are looking at areas of industrial gears and automotive, he says.

In the business of gensets, the company is capable of manufacturing gensets upto 125 kw. We have 100pc design capability. From the pollution standpoint the next revolution will come in the genset industry. We are preparing ourselves and our products are capable of meeting the next level of norms. We have already tested them. Currently we are looking at M&A in industrial gears. In automotive we are not looking at generic auto component field because we ourselves

are not such a company. Within the powertrain domain wherever competencies exist we are keen to explore the opportunity, says Kadapa.

From the transmission point, yes we are working on more modern technologies. Our company Assag has developed gear boxes for electric cars. They also supplied gear boxes for electric monorails. There are three elements of product development. The first one is application engineering. We were doing it a couple of years back. From there we progressed towards development. The third one which will be the ultimate test is the basic R&D. Thats why we set up a new R&D centre in Hosur, he adds. With Avtec working so furiously towards achieving its goals, it can easily be assumed that Avtec has emerged as a formidable engineering powerhouse, not just in India but globally too. MI



EFFICA Gas & Diesel Gensets

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Av Tec Cover Report Sep 2012