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Motown VOL-3 • ISSUE-10 • JULY 2013 • 100

INDIA

THE PULSE OF THE AUTOMOTIVE INDUSTRY

CEAT’s

ONKAR KANWAR, Chairman, Apollo Tyres Ltd.

NEERAJ KANWAR, Vice-Chairman & MD, Apollo Tyres Ltd.

Anant Goenka ‘earns’ his right to grow

Another record breaking edition of

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APOLLO TYRES LTD

Braveheart Kanwars MAHINDRA-CIE AUTOMOTIVE GLOBAL ALLIANCE

SKF to deliver wheel hub

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MAHINDRA CENTURO


mi EDITOR’S NOTE

In the last decade or so Indian automotive companies have bought out big companies beyond the shores of India. Whether it was Tata Motors buying JLR, or Mahindras buying Ssangyong, or the Mindas or the Kapurs of Sono Koyo buying firms in Europe, the rush to invest abroad is simply increasing. The latest big ticket purchase is that of Cooper Tire of US by Onkar Kanwar led Apollo Tyres. There is something extremely gutsy about the Kanwar family. Several decades ago as a rookie correspondent in the Hindustan Times newspaper I have had the privilege of interviewing the late Raunaq Singh, the man who originally promoted Apollo Tyres. He was a risk taker. He was not born with a silver spoon, but simply had the guts to venture into new businesses. The very same genes continue to be running in the veins of Raunaq’s son Onkar Kanwar and his grandson Neeraj Kanwar. They have gone ahead and bought Cooper Tire, a company almost double the size of Apollo Tyres. Despite the fact that the times are bad, that the automotive industry in India and elsewhere are not doing too well, the Kanwars have gone ahead with the purchase deal. This is a story of the braveheart Kanwars. Unless a businessman takes risk, he cannot expect to win big. The Kanwars have taken a huge calculated risk. If things go according to their plans, they will be hailed by the media... the very same media that seems to criticise this brilliant move now. Pen pushers, how fickle are you all!

P. Tharyan

Editor Punnoose Tharyan Editorial Advisors Salil Sharma, Alexander T., Annie Jacob -------------------------CONTACT For editorial editorial@motownindia.com For advertising sales@motownindia.com +91-9958125645, +91-9911729429 For subscription subscription@motownindia.com --------------------------

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EDITORIAL OFFICE 145 B /9,First Floor, Kishangarh, Opp. CNI Church, Vasant Kunj, New Delhi 110070, Tel: 011-26122758/59, Tele Fax: 011-26122757 -------------------------DISTRIBUTED BY Central News Agency, New Delhi -------------------------EDITORIAL CONTENT The publisher makes every effort to ensure that the contents in the magazine are correct. However, he can accept

no responsibility for any effects from errors or omissions. Any unauthorised reproduction of Motown India content is strictly forbidden. -------------------------Motown India is printed, published, edited and owned by Punnoose Tharyan and published from 4058 / D-4, Vasant Kunj, New Delhi-110070. Printed at Pearl Printers, 52, DSIDC Shed, Okhla, Phase 1, New Delhi. This issue of Motown India magazine contains 80 pages including both covers.

July 2013 / 3


CONTENTS

22. Scania engines for industrial, marine and power generation Commercial vehicle and engine manufacturer Scania is foraying into the engine segment in India. The company, which has launched its power generation engines for prime power, at the INTEC - Industrial Trade Fair in Coimbatore, said bookings for engines have started. Scania is one of the world’s leading manufacturers of trucks and buses as well as industrial and marine engines, with an excellent reputation and highly loyal customers.

36. At Volvo Trucks, business acumen means driving smartly

32. Mahindra Group signs pact with Spain’s CIE Automotive for global alliance The Mahindra group has signed a multi-structured deal under which its auto component arm (held under its Systech Sector) will pick up 13.5pc stake in Spain’s auto component maker CIE Automotive for €96.24 million (approximately 740 crore).

On the face of it, a fuel efficiency competition among truck drivers may sound like a game meant to cheer drivers in their mundane jobs. But the moment you take a closer look at the competition, you realise the seriousness of it and the ramifications it has on the very essence of the trucking business. The Volvo Trucks Fuel Watch Competition is an annual competition conducted by VE Commercial Vehicles Limited (VECV).

44. $ 2.5 billion Apollo – Cooper Deal: Braveheart Kanwars If doing business merely means a simple exercise involving a sea of numbers scribbled together on a balance sheet, Apollo Tyres Ltd could be facing an uphill task. Apollo Tyres Ltd is today a $2.3 billion company in terms of revenue. On June 12, 2013 the company announced it was buying out US based Cooper Tire & Rubber Company with revenues of around $4.2 billion. The $2.5 billion acquisition would be funded largely through debt and be completed in the next three to four months.

4 / July 2013

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CANDID VIEWS

Scooters making a cool comeback SALIL SHARMA, Partner, Kapur Sharma & Co., www.kapursharma.com

T

here was a time when the common wisdom in the automotive sector was that the dependable two wheeler carrier of the middle class Indian, i.e. scooter, had outlived its utility. The proponent of this theory felt that motorcycles would continue to dominate the Indian roads as far as two wheelers are concerned. The conviction was so strong that the dominant player (Bajaj Auto) decided to give up its near monopoly position in scooters and switched to motorcycles. The reason for such a turnaround was that Hero Honda (now Hero Moto Corp) had at the turn of the century taken over the mantle of the largest manufacturer of two wheelers in the country selling motorcycles. When the next generation of the Bajaj Auto management took over (namely Rajiv Bajaj) it decided to exit the scooter category and concentrate on motorbike manufacturing. This decision would prove to be an expensive one after a decade. The reason being that now the scooter segment is still alive and kicking with the annual sales in the year 2012-13 of 2.9 million units as compared to 9.5 million units of motorcycles sold in the same period. These figures tell us that for every three motorcycles

6 / July 2013

sold there is one scooter which leaves a showroom somewhere in India. There are several reasons for scooter revival in the country. The most important one is the change in user profile. In the earlier century the scooter buyer used to be the middle and lower income group male head of the family. The scooter served as the vehicle to go to office and back as well as the carrier of the family for an outing in the city. The emphasis used to be on low maintenance and fuel efficiency. Now the scooter is being bought by young girls and middle aged women also besides the low income group male. For the woman buyer the scooter is a sign of independence and also a style statement. That is why a lot of time and energy is spent by the scooter manufacturers on styling and color choices of the scooter. The emphasis on fuel economy is no longer there and most of the sub 125cc motor bikes give better fuel efficiency vis-àvis a scooter. The other reason for the current popularity of the scooter is the independent avatar of Honda in India namely Honda Motorcycle and Scooter India Limited (HMSI). They introduced the Activa scooters in India at the turn of the century which became a rage with the lower middle class, especially the businessman

who found it convenient means of transport in congested work area (Chawri Bazaar in Delhi / Mohammed Ali Road in Bombay). The Activa was low on maintenance and convenient to maneuver when compared to the heavier motor bike. The scooter is also becoming a teenage favorite for its ‘cool’ factor because their flashy colors and different designs stand out in the crowd. These factors have led to the mass demand for scooters and HMSI has taken the lead to satiate this demand as it sold 1,420,115 scooters for the financial year 2012 – 13. Hero Moto Corp (which was the reason why the erstwhile market leader Bajaj Auto had stopped manufacturing scooters) is now the second largest scooter manufacturer in the country with their sales touching 5,49,808 scooters. The latent demand was spotted by new comers also such as Piaggio which sold 36718 scooters in its first year while Yamaha managed to sell 60,281 also in its maiden year in the scooter market. It is possible that in one of the brainstorming management meetings of Bajaj Auto regret is expressed at the fact that they had let go of such a lucrative market and that too at a time when they had a strong grip on it. (Views expressed by the author are personal)

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BEYOND LIMITS

Polaris ATVs

Conquering terrains and minds

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olaris All Terrain Vehicles (ATVS) have conquered the toughest terrains of the world. Now they are beginning to conquer the minds of people

8 / July 2013

seeking high levels of adventure and thrill. In India, Polaris Experience Zones are beginning to attract people of all age groups keen to try their hands on a Polaris vehicle, thereby rekindling their adventurous spirits.

Sports Utility Vehicles (SUVs) may sound all adventure and macho, but the experience one derives riding a Polaris ATV is several notches higher. ATVs can overcome some of the most inhospitable terrains. That is one reason why these vehicles are

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BEYOND LIMITS

sought after by those in the Defence, Rescue, Beach Patrolling etc. They also double up as off-road vehicles for those keen on adventure sports. US based Polaris began its innings in India almost two years ago and has since launched over a dozen models. They are made for all age groups and are suited for a variety of activities such as Adventure & Recreation, Sports, Defence, Beach & Forest Patrolling, Rescue, Agriculture etc. Engine displacements range from 50cc to 900cc and come in petrol and diesel variants. In India, Polaris Experience Zones (PEZs) were conceived in partnership with private entrepreneurs. Specially created tracks give people an experience of riding an ATV through some very tough hurdles that include rocky terrains, dirt pits and water bodies. Amazingly, these zones are seeing huge crowds experiencing the thrill of riding a Polaris ATV. And as a business model, these zones have caught the fancy of young entrepreneurs. The latest additions to the list of PEZs are two circuits in Bengaluru in association with Play in Sarjapur and in Yeshwanthpur with Target Games & Facilities. Rajkot PEZ has opened in association with Axterra’s Club. Billed as one of the most exciting tracks, it is spread over 2.5 acres near the 150ft Ring Road. Speaking on the Bengaluru PEZs, Pankaj Dubey, Managing Director, Polaris India notes, “Bengaluru has a rich racing culture and has a wide variety of terrains, hence the off-road vehicle segment has the potential for growth. Southern India is an important market for us as it contributes majorly towards our growth story in India. We plan to increase the number of such tracks from 13 to 25 by end 2013.”

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According to Rajkot track owner Sanjay Patel, “Rajkot has always been a trend setter for Saurashtra region which has plenty of venues for off road riding. The first week response confirmed the success of the track. We did this without much marketing efforts.“ “The response to the Polaris Experience Zone has been good. Unfortunately, not many people know about off-road vehicles in India. However, we are pleased that we are getting repeat visits by our customers. In order to create more awareness, we are coming out with some robust strategies. We will be promoting our track at malls, schools and colleges”, says Suputhrudu,

Head, Operations, Target Games and Facilities Pvt.Ltd, Bengaluru. Currently, PEZs have also opened up at Greater Noida, Ahmedabad, Bhopal, Nagpur, Goa, Pune, Mumbai, Coimbatore, Munnar and Chennai. Polaris India dealerships cover 13 major cities, including New Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Bangalore, Hyderabad, Kochi, Jaipur, Jammu, Ludhiana, Indore and Dehradun. With more and more people flocking to PEZs across the country, it is obvious that off-roading on Polaris vehicles is not just a fad, but something that inspires people to seek and experience higher levels of adventure and thrill!

July 2013 / 9


MOTOWN INDIA HIGHLIGHTS

Tata Motors unveils new emax range Tata Motors has unveiled its emax range of three CNG powered vehicles – new Tata Nano emax – CNG, new Tata Indigo emax – CNG and new Tata Indigo eCS emax – CNG that will be phased in shortly. According to the press statement issued by Tata Motors, “The emax – CNG range, takes each of these vehicle’s efficiency prowess even further. A CNGand-petrol bi-drive system supplements the standard petrol engine, with range-extending capabilities of compressed natural gas. With the ability to store CNG in cleverly-packaged tanks tucked neatly out of sight, CNG technology stretches the vehicles range by approximately 200 kilometres. Switching between CNG and petrol driving modes on-the-fly is effortless, thanks to a push-button fuel type selector.” Besides the new emax – CNG range comes with air conditioning, turning radius, passenger space and comfort, as well as well-appointed interiors, with a warranty of upto 75,000km or 4 years (whichever is earlier), on the new Tata Indigo and Tata Indica emax – CNG and upto 60,000km or 4 years (whichever is earlier), on the new Tata Nano emax – CNG.

10 / July 2013

Datsun, the messiah car for the masses soon!

It’s time for the Maruti, Hyundais, GMs and the Tatas to be really worried. The Datsun small car is on its way to India. Datsun has revealed sketches giving a preview of the first new generation Datsun car, which will be unveiled at a world premiere event in New Delhi, India on July 15, 2013. The car will be the first product aimed for the Indian market – and the first of the future Datsun model line-up to be launched from 2014. The premiere event will not only unveil the new model, but also introduce the Datsun brand whose return to the market was announced in March 2012. It marks a significant milestone and a new chapter in the history of this legendary brand aimed for highgrowth markets like India, Indonesia and Russia in 2014 to be followed by South Africa later in the year. Although Datsun models will be individually developed for different markets, the concept will follow a common inspiration. All future Datsun models will offer

up-and-coming customers in high-growth markets an engaging driving experience, peace of mind ownership and accessibility at the right and transparent price with a competitive Total Cost of Ownership. These product values will be supported by Nissan Motor Company’s experience as a global car manufacturer and technical expertise for local optimised solutions. The 21st century Datsun will deliver a rewarding brand experience with no compromise in terms of accessibility, reliability and durability – the values deep routed in the Datsun heritage. “Datsun will bring competitive products and services, modern and aspirational, while at the same time reassuring, providing superior value and specifically developed for the emerging and ambitious new Middle Class in high-growth markets. The Datsun cars will be locally developed with the support of Nissan Motor Company engineers and stylists and will be locally produced”, said Vincent Cobee, Head of Datsun.

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MOTOWN INDIA HIGHLIGHTS

Mahindra launches Verito Vibe for 5.63L Mahindra & Mahindra Ltd. (M&M) has launched its sub-4 metre Verito Vibe. Designed and developed in-house by Mahindra, the Verito Vibe marks Mahindra’s entry into the compact car market. Powered by Renault’s 1.5 litre dCi diesel engine that delivers a mileage of 20.8kmpl (ARAI certified), the Verito Vibe also comes fitted with Driver Information System (DIS). It will be available in seven colours including the newly developed Aqua Rush and will be available in three variants namely – D2, D4, D6. The new Verito Vibe will be available in Diesel engine only. The price range for the Vibe will be from 5.63 lakh (ex-showroom Mumbai) for the base D2 model, to 6.49 lakh (ex showroom Mumbai) for the top end D6 model. Speaking on the launch of the Verito Vibe, Dr. Pawan Goenka, President – Automotive and Farm Equipment Sectors, Mahindra & Mahindra Ltd stated, “The launch of our much awaited compact car, the Verito Vibe, is another proud moment in our automotive journey. For the Mahindra Group, the launch of the Vibe is a milestone by itself as the team deployed alternative thinking to deliver a high level of technology and performance at a competitive price. I am confident that the Vibe will create an impact in the compact car segment and find favour with the evolving Indian customer.”

12 / July 2013

Volvo V40 Cross Country Crossover for 28.5 lakh

Volvo India launched the V40 Cross Country Crossover at a price of 28.5 lakh, ex-showroom Delhi at its new showroom ‘Swede Auto’ in Gurgaon. Available only in a diesel version and that too in a single variant, the model will be imported in the country through the CBU route and there is no CKD route planned for this car in the near future. The model is available in four colours. The V40 has garnered 80 bookings and the company wants to sell 120 units by 2013-end. Tomas Ernberg, Managing Director, Volvo Auto India said, “The Volvo V40 has received the top rating of five stars in the Euro NCAP collision test. The overall result is the best ever recorded by the institute. Volvo V40 Cross Country which is a variant of the V40 represents a model which is premium in design, features, technology and safety. We offer a complete package with no hidden costs. The V40 Cross Country is an excellent example of how Volvo is taking safety into the future. We believe that the most premium

thing in life is life itself. With TFT instrumentation clusters (no needles); integrated panoramic glass roof and a host of other features as standard, it redefines the compact luxury offering. It is miles ahead of the competition when it comes to intelligent accident prevention and mitigation. The car will bring in new impetus to our growth strategy in India.” The Volvo V40 is powered by D3 2.0 litre turbo-inline diesel engine that produces 150bhp of maximum power and 350Nm of peak torque and is mated to a 6 speed automatic gearbox that has a manual mode. The company claims ARAI certified economy of 16.4 kmpl for this car. It comes with numerous premium features Day time running LEDs, Bi-Xenon projector headlamps and Park Pilot automatic parking system. Volvo cars are known for their safety standards and the V40 too has received the top rating of five stars in the Euro NCAP collision test as it is offered with a range of active and passive safety features.

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MOTOWN INDIA HIGHLIGHTS

Mark Webber joins Porsche

Australian Formula 1 pilot Mark Webber has signed a contract with Porsche that extends over several years. From the 2014 season he will compete in Porsche’s new LMP1 sports prototype at the Le Mans 24 Hours and in the sports car World Endurance Championship (WEC). The 36-year-old Australian has already raced at Le Mans twice. In 1998, he finished runner-up in the FIA GT Championship at the wheel of a sports prototype. Over the course of his Formula 1 career from 2002 until today, Webber has achieved 36 podium places, nine race victories and has started from pole position eleven times. “It’s an honor for me to join Porsche at its return to the top category in Le Mans and in the sports car World Endurance Championship and be part of the team. Porsche has written racing history as a manufacturer and stands for outstanding technology and performance at the highest level,” says Mark Webber. “I’m very much looking forward to this new challenge after my time in Formula 1. Porsche will undoubtedly set itself very high goals. I can hardly wait to pilot one of the fastest sports cars in the world,” he added.

14 / July 2013

Merc Benz India rolls out refurbished E-Class

Mercedes Benz has launched the facelifted E-Class in India with a price tag starting from 41.51 lakh onwards. While the petrol-engined 200 CGI model is priced at 41.5 lakh, the diesel-powered E 250 CDI Avantgarde is available for 44.48 lakh. The E250 CDI model is also available in ‘Launch Edition’ trim, selling for 49.5 lakh. However, only 100 units of the launch edition model of the E-Class will be built. The facelifted E-Class is 11mm longer and 10mm higher than the predecessor. Like the outgoing version the revamped E-Class will also be following the CKD route with its kits being assembled at its existing facility in Pune. Eberhard Kern, Managing Director and CEO, Mercedes-Benz India commented on the launch of the new E-Class, “With more than 2,000 parts and components used, the new E-Class undoubtedly is the ‘Best E-Class ever’ and reiterates Mercedes-Benz’s prowess as the pioneers of technical innovations

towards safety, design, performance and comfort. Its new emotive design reinforced with the Intelligence Assistance Systems, reaffirms the E-Class’ position as the most sought after luxury sedan in its segment. The new E-Class is a completely high-tech package–and a very attractively packaged one at that.” It is powered by 1991cc direct injection petrol engine which develops 184bhp-300Nm and the 2143cc diesel engine that makes 204bhp-500Nm. Both these engines are mated to 7 speed G-tronic automatic transmission. The updated model features a restyled bonnet, a bigger, a new front bumper with bigger air intakes, single unit LED-enabled headlamps, tweaked handlamps and two chrome exhaust tips. The interiors of the car also saw some design changes, like upgraded dashboard, steering wheel and control dials along with a redesigned centre console. The car is also available with “Direct Control” suspension as standard.

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MOTOWN INDIA CV & TRACTOR SPECIAL AUGUST 2013

The Indian commercial vehicle and tractor industries have been going through radical changes in the last decade or so. The products that are manufactured are now technolgically superior, enabling companies to export to countries in Europe and elsewhere. This ‘Special’ on these industries will be tracking the progress of the several players in it. Be a part of this ‘CV and Tractor Special’.

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MOTOWN INDIA HIGHLIGHTS

Atul Auto unveils Gemini Dz diesel three-wheeler Atul Auto Ltd, a leading 3 wheeler manufacturer has launched a 395cc 4-stroke diesel three wheeler, Gemini Dz in Kerala. The company has provided commercially viable models in passenger and commercial segment for last 25 years of their journey. Gemini Dz will come with a 7.4HP diesel engine, electric start and many other features. Attractive interiors add to the styling of the vehicle. This includes a smart dash board, sufficient space for passenger comfort and luggage space with dual tone high quality seats. Atul Auto is offering 24 months warranty and six free services for the Gemini Dz. Moreover, the product will be backed up by Atul Auto sales and service network of over 147 dealerships in addition to more than 106 touch points. Commenting on Gemini Dz launch Paul Zachariah , Vice President Marketing – Atul Auto Ltd said, “We are happy to launch Gemini dz here, as our previous model GEM has appreciated by our customers and dealers at a big scale all across the network. Gemini Dz redefines all performance characteristics like pickup, fuel efficiency, reliability and safety to give pride of ownership to our customers. While designing Gemini Dz our R&D team has considered every aspect of efficiency which will result in more earning for vehicle owner. We believe that Gemini Dz will deliver excellent values.”

16 / July 2013

Hero MotoCorp buys 49.2pc stake in EBR for US$ 25 million Hero MotoCorp Ltd. (HMCL) has announced its firstever equity partnership in an overseas company. The homegrown two-wheeler manufacturer, which is targeting to achieve annual sales of 10 million units in the next few years, is investing US$25 million for a total stake of 49.2pc in the share capital of its US-based partner Erik Buell Racing (EBR). The first tranche of US$15 million has already been invested by HMCL. The second tranche of US$10 million is proposed to be invested within the next nine months.The investment in EBR is being done through Hero MotoCorp’s newly-incorporated wholly-owned American subsidiary HMCL (NA). Pawan Munjal, Managing Director and Chief Executive Officer, Hero MotoCorp Ltd, said “The equity partnership with EBR is reflective of our long-term vision of transforming Hero MotoCorp to a truly global two-wheeler major with footprints spread across continents, offering a wide range of technologicallyadvanced two-wheelers. Indeed, this equity partnership is a natural extension of our existing relationship

with EBR, which is going to further strengthen our strategic alliance. As we go on spreading our footprint in new international markets, we will look at having extended centres of our own R&D at multiple locations around the world, developing twowheelers for our global customers. Our evolving relationship with EBR is an initiative in that direction. We will continue to look for both organic and inorganic growth as we keep expanding globally. Our fully-owned new overseas subsidiaries such as the one in the US and in Netherlands will play important roles in our future overseas acquisitions and investments.” With this equity partnership, Hero MotoCorp will now have representations on the EBR board with two directors and one observer. However, there will be no organisational changes at EBR, and Erik Buell will continue to be its Chairman and CEO.

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MOTOWN INDIA HIGHLIGHTS

Terrano is the new premium SUV from Nissan in India Nissan has announced the name of its new premium SUV. It will be called the Nissan Terrano. The company has revealed a sketch of the new model, which is planned to be launched in the 2013 financial year. Terrano will be produced at Nissan’s Oragadam Plant alongside the premium hatchback Micra, Sunny sedan and Evalia urban class utility vehicle, expanding Nissan’s locally-built model range to four. President and CEO of Nissan Motor India Pvt. Ltd, Kenichiro Yomura, said Terrano will play a key role in increasing sales within the Indian market. “I am delighted to reveal both the name and the very first image of what will be a very important model for Nissan. You can see from the sketch that Terrano has a bold and distinctive design that I am confident will appeal to our growing customer base in India, as will its driving performance and range of other features that will be revealed at a later date,” he said.

18 / July 2013

Figo tops J.D. Power Asia Pacific Vehicle Dependability Study ’13 Ford Figo has won yet another accolade and has notched the top ranking in the latest results of the prestigious J.D. Power Asia Pacific India Vehicle Dependability Study (VDS) 2013. Ford Figo has been rated as India’s most dependable premium compact vehicle leaving behind vehicles like Maruti Suzuki Ritz, Hyundai i20 and surpassing the industry average score of 270. The study ranks vehicles from across segments for dependability based on an extensive research encompassing 169 factors. “Quality is a key cornerstone of our brand promise and this recognition further strengthens our commitment to laser sharp focus in delivering quality products and services to our customers. The award reinforces the Figo’s reputation as a reliable, substantial vehicle with outstanding value for money,” said Joginder Singh, president and managing director of Ford India.

Widely acclaimed as one of the best offerings in its segment, known for its best-in-class quality features and value for money, Ford Figo has found a place in the prestigious Limca Book of Records 2012 as the most awarded car in India in its debut year. Exported to 37 international markets, Ford Figo has established India as one of Ford’s preferred locations for a world-class manufacturing centre. The Ford Figo offers a substantial package with its best in class space, AC and first in segment Bluetooth connectivity. A nimble wellengineered steering and suspension, responsive engine and light and precise steering also make the Figo a fun-to-drive car. The latest VDS ranking of number one position in the competitive premium compact segment validates the Figo’s offer of world class reliability in addition to its Smart features, Safety and Green, fuel efficiency. The 2013 India VDS Rankings included 61 vehicle models spread across 11 market segments and its rankings are the result of extensive evaluation of feedback from over 7,000 customers in 25 cities across India. The study, now in its sixth year, measures dependability based on the number of problems reported per 100 vehicles, with a lower score reflecting higher longterm vehicle quality.

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MOTOWN INDIA HIGHLIGHTS

JLR announces virtual engineering research programme in the UK Jaguar Land Rover and the Engineering and Physical Sciences Research Council (EPSRC) of the UK have announced a £10m ( 87.53 crore) virtual engineering research programme. In fact, five new academic research projects that will advance the UK’s role in developing virtual simulation technologies were unveiled recently by the Secretary of State for Business, Innovation and Skills, The Rt.Hon Dr Vince Cable MP. The £10m (five year collaboration between Jaguar Land Rover and the country’s leading academics will develop the capability of the virtual simulation industry in the UK and will give manufacturers like Jaguar Land Rover access to new, worldclass simulation tools and processes. This is the first phase of a 20 year strategic project that could put the UK at the leading edge of virtual simulation globally. The research will improve the quality and capabilities of simulation, using sights, sounds and even smells to make virtual simulation more realistic. Giving engineers a more realistic perception of what a design might achieve, as well as giving them access to more powerful computers, will mean even more engineering can be virtual. This will help manufacturers like Jaguar Land Rover deliver more complex new vehicle programmes more quickly. It will also help save costs in product development by reducing the reliance on physical prototypes and have environmental benefits by limiting the number of prototypes that need to be driven and tested in

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the real world. Announcing the funding during a visit to WMG at the University of Warwick, Dr Cable said: “With world-class universities and cutting edge companies like Jaguar Land Rover, the UK is well placed to be at the forefront of driving innovation and developing new technology. This investment will support the Government’s industrial strategy by boosting the UK’s manufacturing capability and helping to keep us globally competitive.” The projects form part of the ‘Programme for Simulation Innovation’ (PSI), a partnership between Jaguar Land Rover and the Engineering and Physical Sciences Research Council (EPSRC), Loughborough University, University of Leeds, University of Cambridge and Warwick Manufacturing Group (WMG). The PSI project is funded by Jaguar Land Rover (£4m- 35 crore), the Engineering and Physical Sciences Research Council (EPSRC) (£4m- 35 crore) and the partner Universities (£2m- 1.75 crore) and is split into two phases that will run over the next five years. The five projects announced today form the first phase and will make up 80pc of the programme.

Daimler India ships out 1st batch of FUSO trucks Daimler India Commercial Vehicles Pvt. Ltd (DICV) has exported the first lot of 64 FUSO trucks, manufactured at its Oragadam Plant. These trucks are headed towards Sri Lanka as part of its commitment to export to various countries in Asia and Africa. Marc Llistosella – Managing Director and CEO, DICV said: “The export of the first FUSO trucks to Sri Lanka is a realisation of our promise to export from DICV, Chennai. The quality standards at our state-of-the-art plant in Chennai combined with the quality of parts from Indian suppliers has made this possible. Going forward, more trucks will be exported to other Asian and African markets.” The FUSO trucks range manufactured at DICV‘s Oragadam plant comprise 5 models spanning Medium/Heavyduty (25 – 49 tonnes referred to as ‘FJ’, ‘FO’ and ‘FZ’) and Light/ Medium-duty (9 – 16 tonnes referred to as ‘FA’ and ‘FI’).

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MOTOWN INDIA HIGHLIGHTS

NHFI celebrates 250,000th tractor milestone New Holland Fiat India (NHFI) celebrated the 250,000th tractor rolled out of the assembly line of its Greater Noida facility. During the ceremony, Rakesh Malhotra, Head of NHFI, handed the key to the tractor - a New Holland 5500 - to its customer Hema Raghuwanshi from Vidisha district, Madhya Pradesh. This important milestone comes just three years after New Holland rolled out its 150,000th tractor, highlighting the remarkable growth in its tractor business. A subsidiary of CNH Global and part of the Fiat Industrial Group, NHFI has expanded its business vision beyond its technologically superior range of 32HP to 75HP tractors. Today the company also manufactures the 8,000 family of 3- and 4-cylinder Tier 3 engines, 3 families of transmissions, axles and other components. It has become the first company in India to offer complete farming solutions from sowing to harvesting with a wide range of implements and hay and forage equipment, as well as specialised mechanisation. Its unique product offering includes sugarcane harvesters, cotton pickers, biomass solutions, balers, mowers and choppers.

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2013 Dream Yuga launched with HET at 45,101 Just days after launching the Activa-I in the Indian scooter market, Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI) has re-introduced the 2013 Dream Yuga commuter motorcycle, now equipped with its patented Honda Eco Technology (HET). The price of the motorcycle has been unchanged at 45,101 ex showroom Delhi. Until now, HET technology was available only on Honda’s automatic scooter range. 2013 Honda Dream Yuga will be available in 5 colours- black, monsoon grey metallic, alpha red metallic, force silver metallic and maple brown metallic. The bike is available in three trims and is powered by an 110cc engine that produces peak power of 8.5bhp and 8.91Nm of torque. The engine is mated to a 4-speed gearbox. HET engine of Dream Yuga

will deliver 74kmpl, a figure that is 2kmpl higher than the non-HET engined model. The top end version of the 2013 Dream Yuga comes with tubeless tyres. Honda has claimed that its HET zeroes in on curtailing friction in engine components by usage of lightweight materials that increases overall efficiency of engine by 11pc. HET technology also results reduction in weight by 8pc than earlier engine, thereby increasing power to weight ratio. As a result, the Dream Yuga weighs 108kg. In the coming months, Honda is expected to introduce HET technology to Shine, Stunner, Unicorn and Trigger. Honda has an aggressive strategy to conquer Indian market by introducing newly refreshed products every 2-3 months.

Honda updates the CBR 250R with new livery Honda Motorcycle and Scooter India (HMSI) bought out 4 new global colours for the 2013 CBR 250R including Red, Black, Pearl Sunbeam White and the signature Repsol limited edition livery. The limited edition Repsol colour will only be available till the month of October 2013 only in the Combined-ABS model. The orange livery has been inspired by Repsol Honda team’s Moto GP stars like Dani Pedrosa and

Marc Marquez. The pricing for the limited edition Repsol colour is 1.92 lakh available only in the C-ABS variant.

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MOTOWN INDIA HIGHLIGHTS

Bajaj Auto rolls out KTM 390 Duke for 1.8 lakh KTM Duke 390 has been launched in India at a price of 1.8 lakh (exshowroom Pune) by Bajaj Auto in Pune recently. Amit Nandi, VPProbiking, Bajaj Auto Ltd. and Rajeev Bajaj were unveiled the motorcycle at the launch event at Pune. The second offering from its Austrian partner KTM’s stable, the bike will be sold through 71 KTM showrooms and service centres across the country. The mid-size sports bike will be assembled at the

company’s plant in Chakan, where its 125cc (for export markets only) and 200cc siblings are also made. The Pune-based company, which makes Pulsar and the Discover range of motorcycles, had launched the Duke 200 last year for 1.18 lakh. The Duke 390 is powered by a 373cc liquid cooled engine that produces 43bhp of maximum power and 35Nm of peak torque and is mated to a six-speed transmission. The streetfighter also comes with a host of premium features like ABS with a toggle switch, Metzeler Sportec M5 tyres, aluminum swing arm and alloy wheels, etc. The premium bike, which shares a lot of its components with its 200cc sibling, weighs 145kg and has a fuel tank capacity of 10.2 litres. The bike has a power to weight ratio figure of 296bhp/tonne and can clock top speed of 160 Kmph.

Bajaj Auto launches compact autorickshaws Bajaj Auto unveiled their new range of RE ‘Compact’ passenger vehicles which are powered by petrol, CNG, and LPG engines. There would be seven variants on this platform of the new range. The RE ’compact diesel version will be launched a few months later. Equipped with multiple advancements over the existing passenger vehicles like DTSi engine (4-stroke version), new stylish

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front, easy serviceability and easy repair technologies, the new range has been designed for enhanced performance over their current range of passenger three wheelers. RE ‘Compact’ has been put through customer trials for more than 200 days with over 100 customers. Their responses to the vehicles have been overwhelmingly positive and have validated the improvements over the current range.

Ford EcoSport launched at 5.59 lakh

Ford India launched its muchawaited compact sports utility vehicle EcoSport in India with prices starting at 5.59 lakh (exshowroom Delhi). The model will be available with three engine options of 1.0 litre petrol with EcoBoost technology, 1.5 litre petrol and 1.5 litre diesel engines. While the price of 1 litre EcoBoost petrol version start at 7.89 lakh, the 1.5 litre petrol variant will be tagged at 5.59 lakh. The EcoSport with 1.5 litre diesel’s price will be starting at 6.69 lakh (ex-showroom Delhi) and the automatic transmission version in 1.5 litre petrol will start at 8.44 lakh (ex-showroom Delhi). The Ford EcoSport will be sold in four trim levels i.e. Ambiente, Trend, Titanium and Titanium Plus and will be available in seven coloursMars Red, Kinetic Blue, Moondust Silver, Panther Black, Sea Grey, Chill and Diamond White; and 38 accessories. Likely to be more than 80pc localised, the EcoSport will be pitted against Renault’s best selling Duster SUV which is priced at a range of 7.99 lakh to 12.18 lakh (ex-showroom Delhi and the Mahindra Quanto, which is available at a price of 5.99 lakh to 7.75 lakh (ex-showroom Delhi).

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Pictures courtesy: Scania. Pictures for representation purpose only.

Scania engines for industrial, marine and power generation

Commercial vehicle and engine manufacturer Scania is foraying into the engine segment in India. The company, which has launched its power generation engines for prime power, at the INTEC - Industrial Trade Fair in Coimbatore, said bookings for engines have started. Speaking at the launch, Anders Grundströmer, Managing Director Scania Commercial Vehicle India and Senior Vice President Scania Group noted, “Launching engines in India is a natural extension of our product portfolio as we want to support our customers in all respects. We see

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huge potential for engines in the country across various sectors.” “Our engines are compact and powerful, with high reliability and uptime leading to low operating cost”, he added. Scania is one of the world’s leading manufacturers of trucks and buses as well as industrial and marine engines, with an excellent reputation and highly loyal customers. Every year Scania builds more than 80,000 engines, making Scania one of the most experienced engine manufacturers in the industry. Around the world, in

many different applications, Scania engines are found in trucks, buses, industrial and marine operation, as well as in the power generation sector. Scania offers a wide range of industrial engines ranging from the emission standard Stage II/Tier 2 to the present Stage IIIB and Tier 4i. Integrated with the user equipment, any Scania engine will contribute to strengthen the customer’s profitability and end-user satisfaction. Part of Scania’s offer will also include a range a tailored service packages. Maintenance and repair contracts are fully backed by

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MOTOWN INDIA HIGHLIGHTS

Scania’s service network. As Scania now launches the power generation engine range in India, the company will also be offering Marine engines and Industrial engines through its network which will be established. The power generation engines are equipped with a Scania developed Engine Management System, EMS, in order to ensure the control of all aspects related to engine performance. The injection system is based on electronically controlled unit injectors that give low exhaust emissions with good fuel economy and a high torque. The engine can be fitted with accessories such as air cleaners, radiators and PTOs in order to suit a variety of installations.

Scania invests 250 crore in India Scania is investing about 250 core in an industrial facility in Bengaluru. The Scania Regional Product Centre, India will also be the centre of the company’s commercial operations in the country. Scania’s ambition is to sell about 2,000 trucks, 1,000 coaches per year in the Indian market within the next five years.

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The facility is being constructed in an industrial area 40km east of Bengaluru, the capital of Karnataka state in southern India. Production is expected to start in mid 2013. It is estimated that almost 800 people will be employed at the facility in the longer term. The industrial operations will consist of final assembly of trucks with bodywork and building of complete coaches with bodywork. The head office of Scania’s Indian company, complete with a service workshop and a central parts warehouse, will be housed at the same site. Scania has been represented in the Indian market since 2007, when a partnership

was initiated with Larsen & Toubro (L&T). L&T has successfully established Scania’s trucks and services and has developed a close partnership with customers in the mining industry. L&T currently operates about 10 Scania service workshops at various mining sites in the country and continues to be a trusted partner for off road including mining trucks. In 2011, Scania established the company Scania Commercial Vehicles India in order to boost its presence through sales to additional segments of the Indian commercial vehicle market. Scania recently launched a new range of on-road haulage truck models specially adapted for the Indian market - the R 500 6x4, the G 460 6x4 and the P 410 6x2. The P 410 8x4 mining tipper was launched in December 2012. In the beginning of 2013 Scania launched a new coach range, specially for the Indian market. The new coach range is offered in three models and is a purpose-designed coach for luxury intercity or charter travels.

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MOTOWN INDIA HIGHLIGHTS

Mahindra Centuro has surprises for the commuter motorcycle segment Report & Photography: Abhijeet Singh Mahindra Two Wheelers has given a whole new meaning to the word entry-level. The second offering from the company is to take the commuter motorcycle segment by surprise. Mahindra has launched their 100-110cc segment bashing Centuro for the mass market at an attractive price of 45,000. The Centuro will host a bunch of new features which were not available in the segment, and a few features which were not present in the motorcycle category at all. Mahindra flew in a lot of curious journalists to the beautiful city of Jaipur, also a successful market for the company, to reveal their all new Centuro motorcycle. The Research and Development team has worked their backs off for the development of this particular motorcycle. Needless to say the entire bike has been built from scratch in Mahindra’s state of the art facility in Pune. At its heart lies an 8.5bhp engine, generating a healthy 8.5Nm torque figure. The engine will be mated to a smooth 4-speed gearbox with an even spread of power and torque for less gear shifting and enhanced fuel efficiency. The Centuro will return a fuel efficiency figure of 85.4kmpl, which has been certified by ARAI.

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The feature packed Centuro will be equipped with Anti Theft Alarm with an Engine Immobiliser and an encrypted Remote Flip Key that would greatly help the security of your vehicle. The instrument cluster is digital with an analog tachometer taking the centre. The gauge will also feature a Distance To Empty (DTE) indicator that informs the rider about the range to which the motorcycle can be ridden at the current fuel level. Telltale lights indicate when the bike needs to be serviced and an Economy mode

indicator, which would return maximum fuel efficiency. At the launch event, Anand Mahindra, Chairman, Mahindra Group, stated, “The Centuro has been completely engineered around the consumer and his needs and is a physical manifestation of what we perceive as Customer Inspired Technology”. As a follow up to that statement, and Mahindra’s new customer centric approach, the first 10,000 bookings for the Centuro will be done at a price of 44000 (ex Showroom New Delhi).

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MOTOWN INDIA HIGHLIGHTS

Behind closed doors of the Tata Motors Pune facility Report & Photography: Abhijeet Singh As a part of the announcement of their new brand strategy, christened Horizonext, Tata Motors invited the media from all parts of the country for a visit to their plant in Pune. Through this visit we got a glimpse into the state of the art technology used by Tata Motors for the development of their vast selection of products. Also a part of the visit was the announcement of 8 facelifts across 5 key brands from the Tata stable. Pune facility’s Pimpri unit is spread across 800 acres and the Chinchwad unit is 130 acres in geographical area. The plant is divided into a Research and Development zone for vehicle testing and research exercises, and the manufacturing facility. These research and manufacturing units combined with

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skilled employees allows Tata Motors to produce improved products which are safe and rugged for the use of the huge Indian population. The Research and Development zone includes facilities for various phases of vehicle development. Research is done across parameters such as noise isolation, safety, fuel efficiency and convenience of Tata Motors vehicles. Products undergo rigorous testing by crashing, heating, cooling and just about punishing every bit to

make them strong and safe before putting them on the streets. The Manufacturing zone has a press shop, a welding shop and a trim chassis fitment assembly line. Men working in tandem with machines, sometimes only men and sometimes only machines, gives you an insight into how dedicated Tata Motors is to provide the best vehicles to its customers. Another highlight of the event was the launch of 8 facelifts from Tata Motors. These upgrades include the Tata Indigo eCS, Tata Sumo Gold, Tata Nano and Tata Indica. Essentially they get new graphics and colours, upgraded interiors, suspension tweaks and the new Feather-shift (F-shift) gearbox. Other than that the Tata Indica, Indigo and Nano now get CNG variants, along with the new Explorer Edition of Tata’s premium SUV, the Tata Safari Storme.

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INDIA REPORT

CEAT’s Anant Goenka ‘earns’ his right to grow

Report: Avishek Banerjee, Photography: Mohd. Nasir

I

t’s an era of young and dynamic guns in the Indian automotive and its allied industries. Whether it is Raman Mittal (Sonalika), Dheeraj Hinduja (Hinduja Group), Deepak Jain (Lumax), Nikhil Nanda (Escorts), Prasan Firodia (Force Motors) or Neeraj Kanwar (Apollo), the list of youngsters in the industry is endless and they all are set to unleash their potential and make a mark in their respective firms and contribute with their futuristic ideas to the industry per se. Incidentally, most of them are thirdgeneration entrepreneurs who have pursued their masters degree from abroad and incorporated those learnings in their family business. Some have also gone on to the extent of adding a lot of value to the business due to the skills that they have acquired working with other group firms and international companies. One such example is the corporate honcho Anant Goenka, who was elevated to the post of Managing Director of CEAT Tyres last year to take on responsibilities and expansion plans of the 5,000+ crore firm. Incidentally, he is also the Chairman of Automotive Tyre Manufacturers Association (ATMA). In an exclusive interview with Motown India magazine, the media-shy Goenka was quite upfront about where his company stands at this juncture and what headwinds the domestic tyre industry is facing in the near term. Commenting on his previous stints at KEC International and how it helped him in enhancing his management skills, Goenka said, “Initially when I started off, I was doing a large part of each activity myself. I had to learn to delegate as I grew into larger functions. That was certainly one aspect of me. As I grew, I learnt the art of empowering and delegating. Secondly, I feel that my experience in

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supply chain at KEC has substantially developed my interest in factories or plants which ultimately sharpens my focus towards operational efficiencies, putting in best practices like autonomous maintenance, quality management, etc in plants which I try to incorporate in CEAT now.” Anant Goenka, who is an MBA from the Kellogg School of Management and a B.Sc. in Economics from The Wharton School, has also worked with Hindustan Unilever, Accenture, Mumbai and Morgan Stanley, Hong Kong. There’s an unusual modesty that accompanies him. Apart from zeroing in on the usual strategies to improve operational performance, he has been actively working towards improving the channels of communications with employees. Looking up to his late grandfather R.P. Goenka as his role model, he describes his leadership style as being participative. Since he took over the reins at CEAT on April 1, 2012, a Young Executive Board has been put in place at Ceat that advises the management on a variety of subject which are both strategic and operational. Prior to his MBA, he was also associated with CEAT Limited as Head of the Specialty Tyre Business. Goenka shared, “I would say my leadership style is more of participative because of my age. People who work with me have a lot of experience and domain knowledge. Getting their views first is very important before coming to any decision. I work towards building a consensus or taking their views and coming to decisions on that. As far as formal and informal channels of communications are concerned, I believe these communications are extremely important. I believe the way the environment is changing; everyone needs to understand the context in which they operate. And

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what kind of impact they are having on the company, how things are progressing, and so on and so forth.” Goenka climbed up the corporate ladder starting with a stint at Hindustan Unilever where he worked as an area sales manager on the outskirts of Mumbai. After various stints at business and engineering schools in the US, he was appointed deputy managing director at the family-owned business. His style, he says, is collaborative because he feels he is still young. “I’ve got to learn from people who’ve put so much into the business,” he said When asked to speak about the channels of communication, “A few types of formal and informal communication that we have for example is one is in the form of what we call is connect with the ‘Top Management’. We have branded it as ‘Connect’ and is really is to do with top management addressing the rest of the team or myself addressing the entire team in various locations about what is going on in the company and what could be done better. In a way, putting into

perspective of the whole picture of what is going on in the company. At the end of it, we have a typical open house or a Q&A kind of a session where people can put in any queries, share ideas and thoughts. That is one example. The second thing that we have is with respect to what we call again as ‘Indi connect’, which is really a system where I have a series of lunches with the top talent of the company. I cover about top 100 people of the company through the year and it can be in small groups or on a one-on-one basis. And I get a flavour of the people and they

get a flavour of what is happening. So I give them an update of what is happening. I also get a lot of insights of what is happening or what people perceive about the market, internal environment and also about the company, how things are going on, and whether they have any ideas and suggestions.”

EARNING THE RIGHT TO GROW Under Anant, the company now aims to optimise capacity utilisation of its newest plant at Halol near Vadodara (Gujarat) as well as expand reach in Asian markets aided by a new facility in Bangladesh. CEAT has also bought the global rights to the CEAT brand which will allow it to market

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INDIA REPORT

its products in Latin America and Europe both of which were restricted earlier. However, the young Goenka was pretty categorical in saying that his primary aim is to make CEAT amongst the most profitable tyre companies in India in the next 5-6 years by strengthening the brand and improving operational efficiencies. He was quite clear that it’s practically impossible to figure among the top 10 tyre makers in the world globally in the foreseeable future. “Being a leading global player is certainly something we would be happy to look at. But from a realistic perspective, the top 10 companies need to have a certain turnover of say US$ 6 billion. Only if you make money, you can invest that further money for further expansion and growth. I would like CEAT to be at the leading edge of tyre technology by focusing on research and development of radial tyres and development of alternate materials. Making money is really the first goal. Earn the right to grow, which is very important to me. If you have not earned the right to grow, you don’t deserve to grow further. We can’t say that we want to grow first and become a particular size and then we will see how to make money. So first make your money on whatever size you have and then invest further for growth.” As far as its expansion plans are concerned, he stated that CEAT is looking at growth outside India as the capex for the domestic market has already been spent at Halol.

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“We are not adding any further expansion at this point of time. We have just set up a new plant at Halol (in Gujarat) and it churns out 150 tonnes per day where we are currently at about 80pc utilisation (at 120tonnes per day). Our goal is to make it a 100pc utilsed plant. And then perhaps we may look at further expansion in the radial category, which could be in Halol itself. But no decision is being taken now. Halol does both CV (80 tonnes per day) and passenger vehicle (70 tonnes per day) tyres. So certainly there will be no expansion at Mumbai and

durable, customised tyres for most Indian vehicles including trucks, light commercial vehicles (LCVs), passenger cars (PCs), utility vehicles (UVs), tractors, truck trailers and two-wheelers,” shared Goenka. At CEAT, Anant has been working on changing the product mix with greater emphasis on passenger car radials to improve the margins of India’s fourth largest tyre company. He also looks to create overseas markets for the company. When asked about the inorganic growth, he stated, “We are not looking at acquisitions at this point of time.

Nasik because they are all in the buyers’ category tyres.” Incidentally, Halol plant is the Group’s only radial tyre plant in the country. The Mumbai-headquartered is catering to a number of marquee domestic and multinational clients like Mahindra & Mahindra, Tata Motors, Ashok Leyland, Piaggio, Force Motors, Eicher Motors, AMW, SML Isuzu, Maruti, Suzuki, Hindustan Motors, JCB, John Deere, etc. “We believe in competing with ourselves. Working closely with research and technology department of our OEM partners, we manufacture highly-

Organically too, the company is not looking at any heavy investments in the (domestic market). However, the company is looking at enhancing its presence in some specific segments of the automobile industry. We are looking at a few key sectors that we have identified and are important for us. We are looking at expanding in categories like motorcycle sector, passenger vehicle segment,” mentioned Goeka. After supplying its products to Hero MotoCorp and HMSI, the company has cracked a deal with quite a few players in the two-wheeler space like Royal Enfield,

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Yamaha Motor India and Bajaj Auto. It is to be mentioned that CEAT manufactures a wide range of tyres for various customer radials for Indian vehicles and caters to various user segments including heavy-duty trucks and buses, light commercial vehicles, earthmovers, forklifts, tractors, trailers, cars, SUVs, MUVs, motorcycles and scooters, auto-rickshaws. “We have to move along with or perhaps faster than the industry. The commercial vehicle industry is around 20pc radialised and we are about 15pc radialised. For us to be 100pc radialised doesn’t make any sense. As far as passenger cars are concerned, the industry is 100pc radialised and we are 90+pc radialised at this point of time. Motorcycles worldwide are 1pc radialsed. So we can’t me more than that. We will radialise at pace with the industry”, noted Goenka. Going forward, the company is looking the tap the OE market for bikes as well as the replacement market for both bikes and UVs which are expected to grow faster than other sectors.

INTERNATIONAL MARKETS After having successful operations in Sri Lanka where it has a 40pc marketshare, the company

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INDIA REPORT

is now looking at Bangladesh as the next set of expansion. The flagship tyre manufacturing firm of the RPG Group has signed a joint venture agreement with AK Khan & Co of Bangladesh to establish a tyre manufacturing plant in the aforementioned neighbouring country. CEAT and its Bangladeshi partner will jointly invest US$ 67 million ( 355 crore) to set up the new factory, which is likely to go on stream by the end of 2014. To be built in a phased manner, the factory

about a year and a half or two years from now. So that is going to be our next area of growth internationally. We are also looking at countries in the subcontinent like South East Asia through the export route from this plant,” he said. As per the JV agreement, the Indian tyre major will hold a 70pc shareholding while its Bangladeshi partner will hold the rest of the shares. The company hopes to achieve a 40pc market share by 2016 after the plant becomes operational by the second

will have a capacity of 110 metric tonnes a day. “This strategic partnership will enable us to establish a leadership presence in the large tyre market of Bangladesh. While we will provide technical and business expertise and manage the JV company operations, our partner will bring in their knowledge of its market. The manufacturing plant at its full capacity will be able to cater to majority of the tyre requirement of Bangladesh. The facility will manufacture bias tyres in truck, light commercial vehicle, and twowheeler and three-wheeler segments for the local market. We have already acquired the land and the new plant should also be in place in

half of 2014-15. Even though the overall automotive market has hit a speed breaker, Anant was happy that BSE-listed firm’s profitability has got better over the past quarters. “I think this profitability will continue over a short period of time because of the benefits that we are getting like reduced raw material prices. Rubber prices have come down from 240/kg three years ago to 160/kg now. It is not a challenge anymore. Certainly the situation has got better over the past few months and will be finer in the next few months. A few areas we can look at improving is by increasing the percentage of radials in our lineup or by radialising the market, by offering the customer

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more value-addition, better mileage, better loading, etc and tying up with an OEM at an early stage where you help them in creating a new product. With better products, you can command a premium pricing in the aftermarket,” he shared.

GROWTH PROJECTIONS Being cautiously optimistic, he was cagey in sharing revenue projections and volume growth do you expect in 2013-14. “Looking at the current industry scenario where the OEMs are slowing down, I would say if we can get a revenue growth of 10pc and a slightly higher profitable growth would be good for us. It is difficult for me to give numbers because it is dependent on too many factors,” he said. However, he signed off by spelling out a modest vision for the company and the challenges faced by ATMA. “As I shared, we would be looking at expanding in countries outside of India. We are looking at leadership in a few categories we have identified. Those are the two areas that we want to focus on. For the ATMA, the biggest challenge is that of the whole economy at this point of time. The economy has slowed down substantially over the past few months. Most of the automobile companies are witnessing a degrowth. Most categories, except SUVs, are witnessing a downward trajectory. And that is having an impact on our OEMs’ sales. Over the couple of years, it will have an impact on the replacement sales. Although this will stay on for six months to a year, I am pretty confident that things will certainly get better. Our basic consumption is very strong and we will get out of it,” he said.

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INDIA REPORT

Mahindra Group signs pact

with Spain’s CIE Automotive for global alliance

Anand Mahindra, Chairman, Mahindra Group (seated left) and Anton Pradera (seated right), Chairman, CIE Automotive at the signing of a global alliance agreement between Mahindra’s automotive component businesses (held under its Systech Sector) and CIE Automotive (involving also its subsidiary Autometal). Hemant Luthra, President of Mahindra’s Systech Sector is standing fourth from left.

T

he Mahindra group has signed a multistructured deal under which its auto component arm (held under its Systech Sector) will pick up 13.5pc stake in Spain’s auto component maker CIE Automotive for €96.24 million (approximately 740 crore). Concurrently, the homegrown

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conglomerate has agreed to merge its five listed and unlisted subsidiaries and later sell a stake in the combined entity to CIE Automotive for €100 million ( 770 crore). As part of the transaction, CIE Automotive - through one of its subsidiaries - will acquire stake in Systech Automotive Component, an unlisted business of the Mahindra

Group and CIE Automotive will contribute its forging businesses in Spain and Lithuania and together consolidate all companies under MFL which will be rechristened Mahindra CIE. Mahindra CIE will continue to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). However, the engineering, aerospace and steel businesses under Mahindra

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INDIA REPORT

A VW global plant: CIE Automotive is an OEM supplier to VW. Picture for representation purpose only.

Systech have been excluded from the process. CIE will hold close to 51pc and Mahindra will own about 20pc. The rest will be held by institutional and public shareholders with CIE bringing an open offer of about euro 10-15 million ( 77-115 crore). Even though M&M will cede majority control of the merged entity Mahindra CIE Automotive, the agreement will see the formation of a global automotive component supply network with combined annual sales of approximately €2.2 billion ( 15,000 crore) with operations in North and Latin America, Europe and Asia held through listed businesses in Spain, Brazil and India. This will catapult the merged entity to figure among

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the top 25 companies in the space globally. “Eight years ago, we set out to build an Indian automotive supplier with a global footprint and this drove a series of acquisitions in India and Europe for us. We have been listening closely to our customers who have asked to step up our globalisation efforts and follow them around the world. This grand alliance with CIE enables us to “Rise’’ above competition, quickly extend our reach into new geographies, and grow our collective product portfolio in the coming years,” said Anand Mahindra, chairman of the Mahindra Group and MD, M&M. Hemant Luthra, President of Mahindra’s Systech Sector commented, “Systech businesses

are the result of acquisitions and alliances that we have struck around the world as we sought to quickly expand in the components business with our unique “Art to Part” proposition. This Alliance with CIE dwarfs everything we have done in the past and marks the next bold step towards global supplier consolidation.” Mahindra CIE Automotive will have a board of 14 directors — three from M&M, four from CIE and seven independent. As a quid pro quo, M&M will get two board seats in CIE Automotive which will be taken by Mahindra Systech President Hemant Luthra and Mahindra & Mahindra Group CIO and Executive VicePresident V. S. Parthasarathy Kotak Investment Banking acted

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as financial advisor to the Mahindra Group. Khaitan & Co and DLA Piper were legal advisors to the Mahindra Group. GBP Legal and Amarchand Mangaldas were legal advisors to the CIE Group. Mahindra Systech’s component portfolio includes castings, forgings, stampings, gears, magnetic products and composites and comprises firms such as MFL, Mahindra Ugine Steel, Mahindra Composites, Mahindra Hinoday Industries and Mahindra Gears. Having is operations spread across India, UK, Italy and Germany, the auto component arm of Mahindra posted a turnover of 4,000 crore during the last fiscal. CIE Automotive is headquartered in Bilbao, Spain and focuses on three strategic business areas of automotive components, biofuels and providing technological solutions and Services.The Company is listed on the Madrid and Bilbao stock exchanges and has presence in 15 countries. Its revenues in calendar year 2012 stood at euro 1,647 million ( 12,700 crore). Besides forgings, the company has segments like castings, composites, stampings and roof systems and it caters to Europe, China, Russia, Morocco and Nafta markets. The share sale by Mahindra will trigger open-offer provisions under the Securities Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011. The proposed business transaction will be carried out in a series of steps over the next year that will culminate in picking a stake in CIE Automotive, which is listed in Spain making it the second largest shareholder in CIE. M&M will nominate 2 directors to the CIE board. It will also lead to CIE Automotive taking a major stake in

34 / July 2013

CIE Automotive products. Picture courtesy: CIE Automotive

a single listed entity in India, which will continue to operate the current Systech automotive component businesses globally and include CIE’s European forgings operations.

Expansion Of CIE Group: According to CIE Automotive press communication, this agreement enables the Asian expansion of CIE Group and will allow CIE to reach annual sales of approx 2,225 million euros, implying a growth of 580 million euros compared to 1,645 million euros in 2012. The Group will now have operations in North America, South America, Europe and Asia held through listed businesses in Spain, Brazil and India. Anton Pradera, Chairman of CIE Automotive said “CIE’s leadership and shareholders have set up a strategy to develop the Asian market through India as the gateway to Asia. We have been impressed

by the promise of the Indian automotive market and the growing emergence of India as a key global production hub for small cars. In Mahindra, we found a partner that has a multi-technology portfolio similar to ours and shared the same business values. So while we are happy to see CIE gaining an entry to India, we are equally pleased to have M&M as one of CIE’s largest shareholders” Jesus Maria Herrera, CEO of CIE Automotive and Chairman of Autometal noted that “CIE’s focus on growth with operational excellence is a value shared with the Mahindra Group. This alliance is a step ahead to become one of the most relevant suppliers in the sector in our technologies with presence in all regions, we see a bright future ahead of us.” CIE Automotive is one of the main suppliers of components and sub-components for the

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INDIA REPORT

automobile sector operating in Europe, Brazil, Nafta and China with sales of EUR 1.65bn. Its operations in Brazil, Mexico, USA and China are constituted under its subsidiary, Autometal, listed on the Sao Paolo stock exchange. At its General Shareholders’ Meeting in Bilbao in May 2013, CIE Automotive had presented its new Strategic Thinking for 2013-2017, in which it plans to double its sales and reach 3 billion euros at the end of this period. This goal will mainly be based on increasing the company’s presence in markets with strong growth

such as Asia, where it can achieve a significant market share; on reinforcing its products to reduce consumption and increase safety and comfort; and on a solid financial position, together with a successful management model in which the generation of value is guaranteed and is the top priority. In this sense, worldwide vehicle production will grow by 4.5pc by 2017, going from 80 to 98 million vehicles. Over this period, CIE Automotive estimates it will incorporate 10 companies, mainly in Mexico and India, thus increasing substantially its production, the

meeting discussed. CIE Automotive offers to its customers, OEMs and TIER 1 suppliers, innovative, competitive and high value-added solutions. OEM customers includes the likes of Daimler Chrysler, GM Group, Toyota, Fiat Group, PSA Peugeot Citröen, VW Group, Ford Group, Renault Nissan, among others. Tier I customers include Antolín, Bosch, Continental, DAF, Delphi, Faurecia, Filftrauto, GKN, John Deere, KYB, Lear, Nexteer, NSK, Paulstra, Pierburg, Schaeffler Group, Trelleborg, TRW, Valeo, Visteon, Woco, ZF, among others.

CIE Automotive is a Tier 1 supplier to truck major DAF. Picture for representation purpose only.

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At Volvo Trucks, business acumen means driving smartly Report: P.Tharyan

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INDIA REPORT

O

n the face of it, a fuel efficiency competition among truck drivers may sound like a game meant to cheer drivers in their mundane jobs. But the moment you take a closer look at the competition, you realise the seriousness of it and the ramifications it has on the very essence of the trucking business. The Volvo Trucks Fuel Watch Competition is an annual competition conducted by VE Commercial Vehicles Limited (VECV), a 50-50 joint venture between the Volvo Group and Eicher Motors Limited. Volvo Trucks India FuelWatch was initiated in 2010 and this year it witnessed its 4th season. The competition was held in the inhospitable coal mining terrain in Naigaon near Chandrapur,

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Maharashtra. Around 16 drivers participated in the final competition and they all took turns driving both the FM 400 8X4 as well as the FMX 440 8X4 trucks, with and without load. The 16 drivers were selected out of the 40 nominations from Volvo’s key customers after rigorous evaluations. The competition was conducted for two days where each driver had to drive 2 Volvo tippers – FM 400 8x4 & FMX 440 8x4 twice each under identical operating conditions. Each driver drove in total approximately 19km which gave sufficient data for analysis. After the gruelling drive in the coal mines, the drivers averaged a fuel efficiency of 2.8571kmpl of diesel to 2.0km to a litre of diesel in their FMX 440 trucks. With the FM 400, the drivers averaged a best of 2.32km to a litre to 1.8667km to a litre of diesel. Now these figures may sound a bit routine but the moment you analyse

it, the results startle you. According to VECV officials, the average fleet size in the coal mining belt is 50 trucks and each truck covers a distance of 5 km on a daily basis (round trip). If all the drivers were to drive in the most optimised manner, the fleet owner could save around 82,500 per day or a whopping 2.72 crore approximately every year! That, in short, is the meaning of driving efficiently and driving smartly. “Fuel efficiency and vehicle productivity are critical considerations for fleet operations in mining transport. At Volvo Trucks, special emphasis is given to superior driving skills because it plays an important role in achieving better fuel efficiency and increased profitability,” said A K Birla, Executive Vice President, Sales, Marketing & Aftermarket, VE Commercial Vehicles Ltd. Drivers from key Volvo customers operating in mining segment

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across the country participated in the annual fuel efficiency competition. Volvo Trucks Fuel watch competition is part of Volvo Trucks efforts to educate drivers and create awareness among customers and other stakeholders on the importance of the best driving practices to improve fuel efficiency, reduce fuel cost and increase profitability. “Fuel efficiency is the most critical aspect of profitability in mining transport and we at Volvo Trucks are committed to improving customer’s overall profitability from our vehicles, while encouraging safe driving practices & environmental care through reduction in emissions. The competition highlights the importance of good, safe driving practices and promotes thorough understanding of the latest technologies of high performance tippers, to achieve the best man and machine performance. Fuel watch competition promotes both economic and environmental advantages of the best driving practices and brings out a positive spirit among Volvo tipper drivers,” adds Birla.

Downloading data

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Atul Pandey, driver from S .S. Chatwal & Company emerged as the winner of the India Fuel Watch 2013 Competition. Varinder Singh from M/s Ranjit Buildcon Ltd was adjudged 1st Runner-up and Tileshwar Prasad from Rungta Projects was adjudged 2nd Runner-up. “Fuel reduction is vital, both for cost saving and lowering environmental impact. Our Fuel Watch initiative helps our customers to get the very best in fuel efficiency and lower Winner - Atul Pandey, S S Chhatwal & Co operating costs. Fuel reduction is vital, both economically and The Volvo trucks have electronic environmentally. Environment and management system that recorded economy goes hand in hand” further the trip data including fuel adds Birla. consumption. Before starting of The competition is the ultimate each trip the trip meter was reset test for Volvo Tipper drivers to bring and at the end of the trip the out the best in driving practices data was downloaded thru our under tough off-road conditions “Dynafleet” trip manager software, and achieve highest fuel efficiency. thus the information was taken The onset of monsoon made the from the truck itself. There was no competition even more challenging manual intervention in recording The winning driver achieved the readings leading to any possible a 24pc higher fuel efficiency human errors. The whole process compared to the driver with lowest was very transparent and well fuel efficiency in the competition. explained to all participants prior to beginning of the contest. The competition was conducted by Volvo Trucks driver training centre following global standards and practices laid down by Volvo Trucks, giving each driver identical conditions and opportunity on a carefully selected route in a coal mine. Volvo Trucks pioneered commercial vehicles Driver Training in India and in fact Volvo Trucks is the first CV manufacturer to set up a Driver Training Centre in India to make a good driver better in demanding applications. The Volvo Driver Training Centre has so for trained over 35,000 drivers and it

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INDIA REPORT

helps the drivers understand the latest truck technology, its proper use, safe driving practices and ways of achieving better fuel efficiency. According to VECV official, fuel contributes to 50pc of transport cost for a fleet owner. Driving a truck smartly means using cruise control, keeping the rev range in the green band, maintaining steady speed, using trip computer to monitor fuel efficiency and last but the least, effectively using the engine brake. To date around 9,000 Volvo trucks have been sold in India out of which 6,500 are currently operation on Indian roads. Of these around 4,500 units are deployed in the mining sector alone, while the remaining

operate on road as goods carriers. Now that the competition is over here in India, the winner Atul Pandey would be off to Australia in October 2013 for the Asia competition. And in case he wins there too, he has the chance to go all the way to Sweden in June 2014 for the global

competition among Volvo’s global drivers. Driving Volvo trucks seems to have become a very interesting proposition.

Volvo FMX 440 The FMX 440 is the mining and construction expert from the Volvo stable. The vehicle has a three-piece sturdy bumper with integrated towing beam, skid plate and foot-step. The sturdy front towing device is dimensional for a towing force up to 25 tonnes. The Volvo D13A440 engine offers a torque of 2200Nm@10501400rpm. The 13 litre 6-cylinder inline diesel engine produces 440bhp of power @ 1400-1800Nm and meets Euro III standards. The engine features Volvo Engine Management System, a wholly electronically controlled system which provides precise and efficient engine control. The Volvo FMX 440 tipper is fitted with a fully synchronised

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14-speed splitterrange gearbox. The tipper is fitted with heavy duty hub reduction tandem drive axles where the main reduction takes places in the hub and hence reduces the forces and stresses on drive shafts and crown wheel pinion. The rear axle is matched to tyre size and economic engine speed. The vehicle is fitted with 12 X 24 offhighway pattern tyres designed exclusively for tough conditions in mines. For the driver the cabin is air-conditioned with the

instrument panel gently curved and all controls positioned within ergonomically convenient positions. The cabin has adjustable cushioned driver seat and adjustable steering wheel angle up to 200 and height upto 13cm.

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INDIA REPORT

Isuzu India to leverage on

SML Isuzu distribution network Report: Avishek Banerjee

E

ven though the Indian economy is witnessing continuous recessionary trends, Japanese automobile companies have expressed their bullish sentiment by committing investments worth 15,000 crore in the next few years. Around 10pc of that amount would be pumped in by Isuzu Motor Corporation, the Japanese car, commercial vehicle and heavy truck manufacturer. The Tokyo-listed firm has now firmed up its plans to set up its greenfield manufacturing facility for pickup trucks or Light Commercial Vehicles (LCVs) and Sports Utility Vehicles (SUVs) at Sri City in Chittoor District, Andhra Pradesh, to roll out vehicles by late 2015. To helm its wholly-owned Indian operations, the company has appointed Takashi Kikuchi as the Managing Director. He will be based in Isuzu Motors India’s corporate headquarters in Chennai and will be responsible for overall operations and growth of Isuzu Motors India. In an emailed interaction with Motown India magazine, Takashi Kikuchi said, “The Indian automotive market has the potential to grow rapidly to three-four times its current size in the next 10 years, similar to the growth experienced by China a decade ago. In particular, the LCV market has a very high potential for growth. We plan to make an investment of 1,500 crore in the plant which will have a capacity of 50,000 units in phase I and 100,000 units in phase II. By phase II, the plant will employ more than 2,000 people which would be scalable to 6,000. By 2020, we estimate to reach 120,000 units with one fourth of the output earmarked for exports and expect to have a distribution network of about 160 dealers by that time,” Kikuchi revealed, adding that it is not interested in any local partner for any

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collaboration. Meantime, Isuzu India has indicated that it will also be leveraging on SML Isuzu’s (its sister firm which is into medium and heavy commercial vehicles) distribution network. Besides that, it is also looking at other synergies in terms of component sourcing (for both global and local operations), etc. When asked to shed some light on the same the newly-appointed MD shared, “Isuzu Motors will focus on utility vehicles and pickup trucks and will set up its own distribution network separately. SML Isuzu would continue focus on the business of trucks and buses. In the future, we may look at areas of mutual collaboration in the area of distribution and sourcing.” Early this year, the company launched two models from their lineup – the MU-7 SUV and the D-Max pick-up truck. The MU-7 is priced at 23.75 lakh while the D-Max pick-up truck is priced at 6.87 lakh for the single cab variant and 8.09 lakh for the double cab variant (ex-showroom, Hyderabad). The company currently imports its vehicle as a Completely Built Unit (CBU) from Thailand. Once the plant goes on-stream by 2013-end, it will begin its CKD operations and this will continue till end of 2015/beginning of 2016 when the manufacturing plant is ready. The new plant would be constructed at an area of 100 acre land and would have all the facilities to manufacture the entire vehicle locally. The automaker is now evaluating the feasibility of stamping, welding, painting, assembling, engine manufacturing and transmission assembling at the upcoming plant. When asked whether the company is interested in any other products, he maintained, “We have a competency in the manufacture of SUVs and pickup trucks and would like to focus on our area of strength. In any case, even in the current tough

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market situation, these two are the fastest growing product segments in the market.” Talking about the distribution set up he said, “We will expand our network in a wellplanned step by step manner. Currently, we have two dealers -in Hyderabad and Coimbatore. We will open another in Chennai very soon, and by the end of this year, we plan to have a network of 9-10 dealers. Our initial focus will be on the southern part of India.” When quizzed whether the company is late in foraying into India, he affirmed, “We believe that this is in fact the best time to enter the Indian market. Putting aside the current slowdown in the automotive market, which is a temporary phase, we see that the real long term growth is beginning only now. Isuzu has been well known among the

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Indian customers for its diesel engine technology, so it is not totally new in India. We see the opportunity to create a strong brand and space for ourselves here.” Speculation is also pretty rife that like all the global OEMs, Isuzu is also working in India-specific products. However, it has neither confirmed nor denied this development. “The Indian market is very important for us, and we would like to cater to the Indian customers with our best products. Currently, we are importing CBUs and selling them in limited numbers in order to learn the Indian customers’ requirements and usage. This learning will help us to understand the best products for the Indian market. We will try to develop such products in the long run. We may increase our product

portfolio after we start full scale manufacturing at our own plant, however, we will focus on the product categories of utility vehicles and pickup trucks,” said the MD of Isuzu India. Isuzu is also looking to establish an auto component manufacturers’ cluster in AP. Kikuchi, who has worked with Isuzu for more than 30 years, was previously managing the company’s businesses as the President of Isuzu Motors, Asia and President of Isuzu Motors, Thailand. “I have spent a significant time in emerging markets of Asia and have had the chance to experience the growth in the automotive markets in these countries. I hope to utilise this learning while we setup Isuzu business in the growing Indian automotive market,” he remarked. Isuzu is Japan’s oldest vehicle manufacturer, founded in 1916, to

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produce LCVs globally. Its Thailand plant, which has an annual capacity of 300,000 units, is the only facility now producing LCVs. The global auto firm sells its vehicles in 100 countries around the world. However, it became an integral

part of the Indian auto-world since 2006, when it went into a technical agreement with the automobile company, Swaraj Mazda, for the production of commercial vehicles. Later, when Mazda pulled out of the JV and the title of Swaraj was

sold to Mahindra & Mahindra, Isuzu Motors Ltd., in cooperation with the Japanese owner group, Sumitomo Corporation, of Swaraj Mazda, gave the original venture a new avatar, renaming it as SML Isuzu Limited in 2011.

HM to assemble Isuzu vehicles at Thiruvallur Isuzu Motors India Private Limited, a subsidiary of Isuzu Motors Limited, Japan, has signed an agreement with Hindustan Motors Limited (HML) for contract manufacturing of Isuzu SUVs and pickup trucks in India. The components for producing these vehicles will be imported by Isuzu Motors from Thailand and assembled in HML’s factory at Thiruvallur, near Chennai, Tamil Nadu. Takashi Kikuchi, President, Isuzu Motors India Private Limited, said, “We are very confident about the growth prospects of the SUV and LCV market in India, notwithstanding the current slowdown. We are also very happy with the positive feedback of the market to our MU7 SUV and DMAX pickup truck, which we launched in Coimbatore and Hyderabad in March this year by importing these as CBUs from Thailand. We would now like to accelerate and carry forward this positive

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momentum and expand our sales operations in other parts of India, starting with the Southern region. The collaboration with Hindustan Motors will support us by carrying out assembly of our products at Thiruvallur which is about 70km from Sri City, Andhra Pradesh, where our own local manufacturing facility is planned to come up. We can thereby advance the scope of our sales operations and increase the scale of supply volumes without waiting for our local manufacturing facility to be ready. “Hindustan Motors Limited and Isuzu Motors have enjoyed good historical relationship, and know each other as business partners very well. The Thiruvallur facility is one of the best automotive manufacturing facilities in India, and can meet the high quality standards of Isuzu Motors,” Kikuchi added. Commenting on the development, Uttam Bose, Managing Director & CEO,

Hindustan Motors Ltd., flagship of the C K Birla Group, stated, “Our agreement for contract manufacturing of Isuzu’s globally renowned vehicles is a testimony to the state-of-the-art manufacturing facilities at our Thiruvallur plant. The operations will enable HML to optimally utilise its spare capacity at Thiruvallur and make eminent business sense at a time when the Indian economy and the automobile industry, in particular, are passing through testing times. The agreement with Isuzu is a strategic move to keep Hindustan Motors on the growth path.

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US$2.5B APOLLO–COOPER DEAL

BRAVEHEART KANWARS Report P. Tharyan Photography Mohd. Nasir

I

f doing business merely means a simple exercise involving a sea of numbers scribbled together on a balance sheet, Apollo Tyres Ltd. could be facing an uphill task. Apollo Tyres Ltd. is today a $2.3 billion company in terms of revenue. On June 12, 2013 the company announced it was buying out US based Cooper Tire & Rubber Company with revenues of around $4.2 billion. The $2.5 billion acquisition would be funded largely through debt and be completed in the next three to four months. The Onkar Kanwar family that controls Apollo Tyres immediately went out and explained to investors and media across the country that this acquisition was not at all a risky

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proposition. But those who delved into the company’s balance sheet and calculated the risk associated with this acquisition were not too impressed. On June 12, 2013 the Apollo Tyres stock had closed at 92 per share on the Bombay Stock Exchange. The market capitalisation of the company stood at around 4,600 crore. The Apollo Tyres scrip touched a 52-week low almost every day after the acquisition announcement was made. On June 27, 2013 it had reached a low of 55 per share. The market capitalisation had touched around 2,750 crore! Despite all the convincing at media and investors meetings, the Kanwars had failed to get their message across. But then business is a tricky

proposition. It goes beyond the mundane world of numbers. Every business carries an element of risk. The bigger the risk, the bigger is the rise or fall. In the case of Apollo Tyres, the Kanwars feel that their acquisition is a calculated risk that should not worry the number crunchers.

THE DEAL According to the agreement between Apollo Tyres and Cooper Tire, a wholly-owned subsidiary of Apollo will acquire Cooper in an all-cash transaction valued at around 14,500 crore ($2.5b). Copper shareholders will receive $35 per share in cash. The debt that would arise out of this deal would be

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COVER REPORT

ONKAR KANWAR , Chairman & NEERAJ KANWAR, Vice Chairman & Managing Director, Apollo Tyres Ltd.

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APOLLO + COOPER: SCALE WITH DIVERSIFICATION

Revenue EBITDA EBITDA Margin Manufacturing Plants Market Position

APOLLO

COOPER

PRO FORMA

$2,353mn $268mn 11.4% 6 #16

$4,201mn $526mn 12.5% 8 #11

$6,554mn $794mn 12.1% 14 #7

Geographic Mix India Others

Europe

North America

Int’l

North America Europe

India China Others

(Apollo Management Estimates)

shared. Apollo Tyres will attract new debt of $450 million. The company already has an existing net debt of $354 million as of March 2013. With the new debt, the company would have to bear a net debt of around $800 million, post the acquisition transaction. As for the rest of the money, around $1.9 billion will come from seven-year bonds while another $200 million will come from asset based loan (ABL). This is what the Kanwars want to point out. According to them the transaction

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structure has been designed to insulate the core Indian business and take advantage of the attractive US leveraged finance markets. “Apollo India is borrowing $450 million. The transaction cost is $2.5 billion out which $450 million is going into the parent. And the rest $2.1 billion is taken on the new entity through a holding company in Mauritius. It’s a Leverage Buyout Structure . Out of the $2.1 billion, $1.9 billion will be through the bond market in the US which will be placed in the next three months.

Another $200 million will be through an asset based loan which is primarily a working capital which is against the assets of Cooper. The bond will have a seven year term and it would have a bullet wherein the interest is paid after seven to eight years. We are estimating it would be placed at 6.75 to 9.5pc”, says Neeraj Kanwar, Vice Chairman and Managing Director, Apollo Tyres. “The bonds are high yield bonds. The bonds will be traded primarily in the US and might be in some of the European markets. They do not

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“The combination of Apollo and Cooper according to us is a game changer in the tyre industry and is a very good strategic fit for the tyre industry specifically for the customers. You get a global presence.”

have any convert option to them. The tenure would be seven to eight years. We would have an option to call them also after four years. In that case there is an interest hike. There is a bullet repayment at maturity. We do not amortise over the period of the bond but only service the interest. The bond will be issued by the holding company which comprises of Cooper and Vredestein. Given the fact that they are high yield bonds there are no covenants on them. They are fully underwritten by our supporting banks. Bonds would have marginally higher interest than bank loans, but the flexibility that it offers us is far more significant in an industry like ours,” notes Sunam Sarkar, Chief Financial Officer and Member of Management Board at Apollo Tyres Ltd. The bonds

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“Now we own three brands, Apollo, Vredestein and Cooper. All brands add different values. Apollo will be the global brand which will also be the OEM brand”.

have been fully underwritten by four global institutions--Morgan Stanley, Deutsche Bank, Standard Chartered and Goldman Sachs. Adds Sarkar, “The $450m is taken by India but that would be reduced upfront from the proceeds from the sale in South Africa. We also have access to some dividend upstreaming from the Cooper plus Vredestein entity to further reduce the payment obligation” From the point of rupee depreciation too, the company is insulated, as Kanwar explains. “Less than 25pc of the combined entity is rupee based. The entire loan is dollar based. It creates a huge growth opportunity for all of us in Apollo and for our shareholders. The cost savings from the transaction are expected to make the group much more profitable from where we are today,” he notes. The asset based loan of $200 million would be against the current assets of the Cooper company. “It’s against the receivable of the company. It’s purely a working capital. It’s not pledging rather it is secured against the current assets of the company,” notes Sarkar. “Around 85pc of the total transaction debt is on the

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international entity. On Apollo India the debt will go to $0.8 billion with the addition of the $450 million. The interest cost on that will be approximately $100 million. The EBIDTA for March 2013 was $174 million. The interest is covered 1.7 times. Apollo overseas will have a net debt of $2.3 billion with a cost of around $180 million. The EBIDTA for the overseas operations is $675million. The interest is covered by 3.8 times. There is hardly any risk. These are not projections but actual figures done in March 2013,” adds Kanwar.

THE BENEFITS Apollo, founded in 1972, has an international reputation for high performance tyres across a portfolio of well-known premium and mid-tier brands, including the flagship Apollo brand and Vredestein. Cooper, the 11th-largest tire company in the world by revenue, was founded in 1914 and today supplies premium

and mid-tier tires worldwide through renowned brands such as Cooper, Mastercraft, Starfire, Chengshan, Roadmaster and Avon. The combined company will be the seventh-largest tyre company in the world and will have a strong presence in high-growth endmarkets across four continents. With a combined $6.6 billion in total sales in 2012, the combined company will have a full range of brands and greater ability to satisfy customer needs worldwide. “This transformational transaction provides an unprecedented opportunity to serve customers across a host of geographies in both developed and fast-growing emerging markets around the world. Cooper is one of the most respected names in the tire industry, with an

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extensive distribution network and manufacturing infrastructure, and a particularly robust presence in North America and China. The combined company will be uniquely positioned to address large, established markets, such as the United States and the European Union, as well as the fast-growing markets of India, China, Africa, and Latin America where there is significant potential for further growth. Our combined portfolio of brands and products will be amongst the most comprehensive in the industry,” states Onkar S. Kanwar, Chairman of Apollo Tyres Ltd. “The tyre industry has been consolidating in the last so many years. Even in India there has been a consolidation stage. Consolidation is one of the key points for our industry. In the automobile industry,

“It creates a huge growth opportunity for all of us in Apollo and for our shareholders. The cost savings from the transaction are expected to make the group much more profitable from where we are today.”

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Onkar Kanwar (Centre), flanked by Neeraj Kanwar and Sunam Sarkar

the US and Europe markets are the biggest profit pools given the technology and infrastructure that is available there, other than emerging markets like India and South East Asian countries. China and India are the fastest growing economies in the world. By 2020, China has the vision of becoming the largest automotive country in the world. That in itself is a very big thing for the tyre industry,” says Neeraj Kanwar. Founded in 1914, Cooper Tire is primarily in passenger car radial tyres and SUV and light truck tyres. It was always a replacement company but is slowly getting into the OE segment. They have also introduced truck and bus radial tyres. In North America it is the fourth largest company with a market share of 13pc to 14pc in the US. “It (the acquisition) gets you a footprint in America, in China, Mexico and Europe. Around 70pc of Copper’s revenue comes from North America. China contributes another 20pc. It is getting into Eastern Europe with an acquisition it made in Serbia early part of this year. It has eight

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manufacturing plants, three in US, one in Mexico, two in Europe and two in China. Around 40pc of its capacities are in low cost countries which includes Mexico, Serbia and China,” reveals Kanwar. Over the last three years Cooper has had a 16pc growth in North America. Its operating profit margin has gone up from 5pc to 9.6pc. Today North America is the largest tyre market in the world. In China Cooper has a $1.3 billion revenue. Over the past three years there has been a 9pc volume growth. In terms of sales there has been a 20pc growth in the past three years. Operating profit has also gone up by nearly 30pc. Cooper’s net sales in 2005 stood at $2.5 billion. It has now gone up to $4.2 billion. “Freight is a very important component in our industry so we need manufacturing to be close to markets. What the current management of Cooper has managed to do is that over the last few years they have actually consolidated manufacturing even within the US. In 2008-09 one plant

was shut down and the existing plants ramped up so they became more efficient and more productive. In terms of cost of production they are just as comparable to a traditional low cost country. The other significant impact would be that energy costs in the US are expected to come down significantly with the discovery of shale gas and more and more usage of shale Gas. Actually manufacturing in the US is going to be far more competitive operation than what people have been thinking about in the last few years. Look at what Cooper has done from 2009 to 2012. There has been a 16pc CAGR in a market that has been essentially flat. In Europe in a market that has seen negative growth we have able to grow by 8.5pc. It’s been similar to what we have traditionally done in India. We have just grown ahead of the market. The approach of our company is to gain market share,” points out Sunam Sarkar. “The combination of Apollo and Cooper according to us is a game changer in the tyre industry and is a very good strategic fit for the tyre industry specifically for the customers. You get a global presence--US and Europe are matured markets, China and India are the fastest growing markets. There is no better fit for Apollo in this. You also get a footprint that tackles customers in Latin America though the Mexican plant, in Africa, China through which you cater to South East Asia, India, US and Europe. Now we own three brands, Apollo, Vredestein and Cooper. All brands add different values. Apollo will be the global brand which will also be the OEM brand,” says Kanwar. “Vredestein operates in a very niche market in the tier I segment

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COVER REPORT

as far as pricing is concerned. They make ultra high performance tyres. Cooper also plays in a very niche area. With the combination you get a whole product mix from truck radials to car tyres, agricultural purpose tyres, OTRs, etc. Another complementary benefit you get is R&D. Technology plays a very important role in the tyre industry today. We get a talent pool of 14,000 people through the new family of Apollo and the family become 20,000 people. From the revenue side, we go up from $2.3 billion to $6.554 billion. On EBIDTA the numbers look at $268 million to $794 million. On a margin basis we shall go up to 12.1pc from the current 11.4pc. Manufacturing plants, from six we go to 14,” points out Kanwar. “The main point for Apollo is that we de-risk our strategy. From being very dominant in one country, we are now in several countries. We have de-risked our strategy by playing in several countries”, he adds.

POST ACQUISITION No sooner would the acquisition be complete that Apollo would be in an action mode. Today Cooper sells its Chinese branded tyres ‘Roadster’ in the US. It would be time for Apollo premium truck radial tyres to penetrate the US markets. “Apollo has a premium position in truck radial tyres. That is a big opportunity for us to cross sell. Also we would be able to sell and distribute in Europe using the strengths of Apollo and Cooper. Apollo today has a great relationship with most OEMs. We sell to GM, Ford, Hyundai, VW, these relationships will be taken to Europe and elsewhere. This will be a whole

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new ball game for the car industry. Apollo and Cooper will cross sell in countries and markets where each is strong. Vredestein product will soon be launched in India. Cooper will also be introduced in India markets. Apollo will be introduced in the US markets and the China markets,” says Kanwar. Kanwar feels that if international players are coming into India why cannot Apollo Tyres go to the international market. “It is not the size that matters, it does not matter if it is ten times your size, if there is synergy in it and if it’s a good marriage of two, then there’s an opportunity. It’s a game changer. You have actually acquired a global footprint, you have acquired a network and a brand. Let’s emphasise more on that. You have also added 14,000 people to your

employee strength and that’s a great talent pool. Every new transaction gives you a host of opportunities. We have been able to prove that by our acquisition in Africa and Europe. We have studied this transaction very carefully. The teams have been working to really understand the business opportunity that we shall get through this transaction. Business will run as usual. It will be a great opportunity on cross border learnings,” adds Kanwar. If the next few years pan out exactly the way the Kanwars would want it, then Apollo Tyres could well become a global tyre major to reckon with. Now all this cannot happen by merely looking at balance sheets and deliberating too much on the risk factors. For the braveheart Kanwars, it’s more to do with their fortitude rather than anything else.

“The main point for Apollo is that we de-risk our strategy. From being very dominant in one country, we are now in several countries. We have de-risked our strategy by playing in several countries.”

July 2013 / 51


TÊTE-À-TÊTE

Siddharth Gandhi Head-Marketing, Sales and Business Development, Autoform India Report: Avishek Banerjee, Photography: Mohd. Nasir

Autoform is the leading provider of car seat covers in India which has a presence of over 25 years. It is the largest OEM supplier of PU/PVC accessory seat covers to all major OEMs in India like Honda, M&M, Hyundai, General Motors, Fiat, Nissan, Volkswagen, Yamaha, Skoda, Mahindra Renault, along with automotive retailers like Carnation, Reliance and Car Plus. The homegrown firm’s plant at Dehradun, Uttarakhand is equipped with German CNC auto cutters and Japanese automatic stitching machines. The company also develops a wide variety of innovative and attractive designs at its in-house design studio

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TÊTE-À-TÊTE

It’s a known fact that Autoform India is the largest OEM supplier of PU/PVC accessory seat covers to all major automobile manufacturers in India. However, could you run us through the genesis of the company? Autoform India is about 25 years old. We started with car seat covers sometime back in 1987 and ever since then we have been only into this business. And these are the products that we felt would have a big market potential. This is because there is a need for Indian customers to dress up their interiors. This was realised by us way back in 1990s when people started putting seat covers in their cars. This is how the journey had begun because the need to have nicely dressed seat covers became an integral part in the car owners’ lives. This is because the environment over here is quite dusty and polluted. As a result, the car seats tend to get shabby after three months of purchase. So what we realised was that we can really protect these seats (from dust) by putting seat covers. Gradually, we also focussed on the styling and comfort elements with the covers. This is how we went a level up with our product portfolio.

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You have established a plant at Dehradun, Uttarakhand which is spread over an area of 100,000 square feet. What is the current capacity of this plant? Do you have any plans to enhance the capacity? Infact, we have enhanced the size of the facility to 1.5 lakh square feet and are now producing 20,000 seat covers per month. Depending on the market demand, we can ramp up this further to 38,000 seat covers per month.

Where exactly is Autoform designing and developing its products? Do you have a technical tie-up with any overseas manufacturer? No, we are not having a technical collaboration with any partner. We have an in-house design team which looks after all these operations and usually it is looked after by the plant heads who try to figure out the kind of elements which will appeal to the end customer. Moreover, we travel across the country and abroad to

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TÊTE-À-TÊTE

seek design inputs. Interestingly, the source of inspiration for a lot of our designs has been shoes. You can see a lot of design patterns in the shoes. We try to replicate that with our seat covers. And in the end, it all boils down to the end user. Although we may come up with multiple designs, only those ones are handpicked that are approved by the end customers. And the designs are chosen based on the survey that we do across our network of dealers. Besides running your own distribution network, you are also selling your products through Carnation, Reliance and Car Plus. Does that mean the aftermarket vertical is more important to you than the direct one? And are you open to the idea of selling your products through multi-brand retailers? We are open to the idea of selling our products through Large Format Retailers (LFR), which is gaining a lot of momentum. This is because they have the brand, service, podium and people will have that trust developed more for them than the aftermarket. You are delivering your products

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to a number of marquee clients. As the market is witnessing a slowdown, is your business getting impacted? Yes, we have already been supplying to Honda, Hyundai, Volkswagen, General Motors, Fiat, Nissan, Toyota, Tata Motors, Skoda, and have also started with the two-wheeler segment with Honda and Yamaha motorcycles. The slowdown that you are talking about is majorly because of the

sunfilm business going down. Earlier, when the customers used to go to the retailers for sunfilms, they used to go for other products like seat covers. But with car manufacturers looking to connect with the end customer (during slowdown) by doling out freebies, we have the upper hand. Even though there is a decline in the aftermarket vertical for us, we have got an additional

opportunity as OEMs are looking for seat covers from us. This is because they want to bundle up with freebies in order to aggressively push sales. So in the direct market, there is still an upward swing. Additionally, we are also looking for enhanced business opportunities with more car players expanding their operations here. You are primarily catering to the passenger car segment. Going forward, do you have any plans to diversify into CV, two-wheeler, threewheeler or construction equipment segments? If yes, can you share the timeline with us? As I just mentioned, we have started serving Honda and Yamaha for their motorbikes. Going forward, we would also be dispatching our products to Hero MotoCorp and Bajaj Auto. Maybe TVS may also follow soon. We would also be looking at Suzuki (bikes) at some point of time. As you are aware, we are basically a stitching company whether it is for two-wheelers or four-wheelers. So we are into anything that requires stitching PUC material. We can make different kinds of products at voluminous

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TÊTE-À-TÊTE

levels. Apart from this, CV segment is something we have not yet focussed on. But we are going to supply something to Ashok Leyland for their CVs. Was there any set of challenges in your business before? And are there any new challenges that have come up? Naturally, there were a lot of challenges in the beginning. As we are running a mega facility at Dehradun, it was a bit difficult for us to supply our products across the nation. There were other local manufacturers too who are present in the unorganised sector selling their products to the end retailers. There are about 2,000 seat cover manufacturers in India who are running some corner shops that have around four people are who stitchers, fitters, masters and cutters. Currently, out of 100 seat covers that get sold in the country, we manage to sell 8. With this penetration figure (of 8pc), we call us the market leader in that space. All our products are genuine and are offered at reasonable rates. We will never devalue our products by downgrading our product’s quality. As the market evolves, do your customers seek any sort of customisation? If yes, can you run me through it? The car buyers will definitely seek a lot of customisation. That is the

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only reason we keep on changing the designs of our products after every six months. Even though the products’ chemical composition remains the same, we either tweak the existing design or add some material while developing it. For example, we came up with jute seat covers. We also try to make our seat heat-resistant. A lot of our customers are multiple car owners.

So if they are happy with a particular customisation, they will look forward to approach us for their second or third cars. Do you get a major chunk of your business from premium car buyers? Majorly, our customers are from the B+, C and D segments. But the A segment buyers have also started opting for our products. The quality that we will offer in these segments will be on par with what you have seen with the high-end categories.

Are you also exporting your products anywhere? If yes, can you mention the countries? We have started exporting our products to the UK. But now we have stopped that. We will be targeting Gulf Cooperation Council (GCC) countries like UAE, Saudi Arabia, Oman, etc. We are also considering Turkey for that matter. How do you see the car upholstery industry evolving in India in the next few years? And what is your vision for the company? The car upholstery industry will be evolved to a great extent as people are increasingly looking to redefine their vehicle’s interiors. This is because a car is like a second home for a consumer. The maturity levels of the upholstery buyers will also improve a few years down the line. The vision that we have with this company is that we want to propagate the significance of seat covers in the market along with the USPs of our products. We want to do it at the mass level so that our customers atleast register our brand in their minds when it comes to seat covers. With this we want to connect directly with the end customer and probably set up online operations wherein we can deal with them directly. The seat cover industry will be worth 500 crore by 2015 and Autform should account for 20pc ( 100 crore) of that amount.

July 2013 / 55


Tête-à-tête

Rishikesh Sahay CEO, Rai Automotive Systems

Report: Avishek Banerjee, Photography: Mohd. Nasir

Established in November 2003, Rai Automotive Systems (Rai Auto) is into selling and servicing of automotive body and paint shop equipment in India. The products and services offered by them are used for various purposes like crash repairs, safety, part replacement, cutting & welding procedures, paint refinish application etc, as per OEM’s repair standards and guidelines. It offers crash repair systems from Car-O-Liner, Sweden, paint refinishing systems from Festool, Germany, paint spray booths and prep stations from Blowtherm, Italy, tyre servicing equipments and diagnostic equipments from Ravaglioli, Italy, welding system from Gys, France, among others.

Could you please start with the genesis of the company? Rai Automotive Systems is a 10-year old company which was floated with the idea of providing a complete set of solutions for body and paint shop equipment. In 2003, we began by establishing the first training facility for such equipment in India. We have managed to train around 4,500 technicians from different OEMs like Maruti, etc. We were involved in such training activities until 2004-05 which ultimately revolutionised the body shop business in the country. Nearly 7-8 years back, we were the largest seller of crash repair systems in India. Eventually, we have now evolved into a complete solutions provider. Apart from body and paints shop solutions, we are also offering the products that are required by the workshops owners of all the car manufacturers. Apart from selling the products to our customers, we are also providing end-to-end solutions required to run them. How has the garage equipment

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industry in India evolved over the years? Nearly 10 years back when we rolled out our operations, these workshop owners had serious resistance to our products. For them it was pretty capital intensive to shell out 20 lakh for a specific product. But every authorised dealer in the country today is seeking our products for their crash repair or body repair activities. So the whole scenario has changed a lot. This is primarily because there is a seismic shift in technological capabilities of a car and its after-sale services. For example, a workshop owner needs a proper computerised wheel alignment system to do his job.

Moreover, the safety parameters have also become indispensable for an OEM (to sell his products to the end customers).

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TÊTE-À-TÊTE

a training agreement with one of the European companies and have also conducted a couple of courses. We are in similar discussions with other European brands and will shortly make an announcement.

Which specific segments are you catering to? And which segments give you the maximum volumes? Our primary target customer would be all the OEMs who are in the passenger car space. But we do offer our solutions to HCV and LCV makers. Even though we are not catering to the two-wheeler segment as of now, we might consider it in the distant future. Are your products locally produced? Or are they imported? No, our products are 100pc imported. We have been dealing with various European manufacturers like Celette, Rotary, Blowtherm, GYS, Space, Steril Koni, IRT, etc. As of now, we have no plans to assemble them. But definitely we can assemble them at a later point of time to reduce the products’ costs. Could you please talk about your training facility at Faridabad? We have recently come up with a training facility at Faridabad which is around 48,000 square foot in size. The facility is equipped with worldclass equipment. We are conducting programmes for various OEMs and their technicians. We have signed

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What kind of services are you offering to your customers? We provide services to our customers in terms of installation, training, usage, etc, of the products. These services help them in enhancing their productivity by using our solutions in an immaculate manner. We are also offering after sales support in case there is any breakdown of sorts. Are you running a chain of outlets to showcase your products? No, we are not running any chain of outlets. However, we are running our regional offices and operate through our own channels. As we are basically an equipment supplier, we are not interested in establishing any outlets for either retailing or showcasing our products. Do you witness any decline in sales due to the downturn in the economy? Besides that, what are the other challenges? Our sales have definitely been impacted because of the downturn in the economy. Everything boils down to the sales of the cars. If the car sales drop, then the workshop owners will be deferring any capital-intensive investment like installing our equipment. That really affects our business. Furthermore,

the hike in foreign exchange rates (on imported goods) compounds the problem. As we are dealing in premium products, it’s very difficult to compete with these Chinese and other companies. Having said that, people are slowly realising the durability of our products. Another challenge is that even though our turnover is going up, our profitability is going down. We are trying to be sustainably profit in our operations. Lastly, what is your long-term agenda for the company? Where do you want to see this firm in the next few years? Our primary agenda is to address the dire need for a skilled manpower in the country. We would like to tie-up with Diploma colleges and would like to train the workers

who can later be inducted by car manufacturers and their dealers. We are in serious discussions with various government agencies for the same. We have started the move by opening a training facility. We consider it as a Corporate Social Responsibility (CSR) initiative to generate employment opportunities. From a business point of view, we are expecting some enhanced business opportunities from European car manufacturers. When I talk in terms of turnover, we should be achieving 100 crore in the next five years from 35 crore currently.

July 2013 / 57


GLOBAL REPORT

Another record breaking edition of

Automechanika Dubai Report: P.Tharyan, Pictures courtesy: EPOC Messe Frankfurt GmbH

Setting a new record in terms of participants, business and overall visitors, the Automechanika Dubai exhibition at the Dubai International Convention and Exhibition Centre, Dubai, UAE from June 11 to 13, 2013 reported a double digit growth. The exhibition welcomed more than

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24,000 trade visitors from around 130 countries, a 16pc increase on 2012. The rapidly growing fair – 25pc larger in terms of net space occupied – featured 1,482 exhibitors from 58 countries and is now a confirmed stalwart on the international trade fair calendar.

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GLOBAL REPORT

Automechanika Dubai’s ongoing growth is also reflected in the consistent development of the automotive aftermarket trade in the region. For the first time in its history, Dubai’s auto parts and accessories trade reached the US$10 bn mark in 2012. As such, Dubai is considered not only a regional, but an international hub for the automotive aftermarket trade, strongly supported by its world class storage and logistics services. The year 2013 marked the 11th edition of Automechanika Dubai – the Middle East’s leading international trade fair for the automotive industry targeting trade visitors from Western Asia, Eastern Europe, the CIS and Africa. The show featured 23 official country pavilions with debuts from Netherlands and Indonesia and also enjoyed the support of 37 international trade associations. The show also welcomed first time exhibitors from Macedonia and Malta and had 12pc more UAE exhibitors than the previous edition. Automechanika Dubai is divided into four distinct product

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sections for the convenience of visitors and exhibitors. These are Parts and Systems which take up approximately 69pc of the exhibition, Tyres and Batteries, occupying about 16pc of the show floor and Repair and Maintenance and Accessories and Tuning which occupy a further 14pc between them. The next edition of Automechanika Dubai will take place from June 3 to 5, 2014 at the Dubai International Convention and Exhibition Centre. “Driven by the strength of the Automechanika brand worldwide, the Dubai edition has firmly established itself as a must attend event for anyone interested in doing business within the automotive aftermarket in the Middle East and wider region,” said Ahmed Pauwels, CEO, Epoc Messe Frankfurt, organiser of Automechanika Dubai. Saudi Arabia, Iran, Pakistan and India were the largest visiting countries after the UAE to Automechanika Dubai 2013. With approximately 130 visiting countries, the show’s reach is unparalleled for

the automotive aftermarket. During the fair, exhibitors reported on the key role which Automechanika Dubai plays in their business. Dr. Khaled Alexander Sabbah, Managing Director at ZF Middle East, said, “The number of valuable contacts, the high calibre participants and the many face to face encounters with our customers make Automechanika

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GLOBAL REPORT

Dubai an exceptionally important platform for ZF in the Middle East”, while Camillo Riccetti, Area Sales Manager, BF Germany GmbH, commented, “Automechanika Dubai is essential for our markets.” Speaking about the wide product areas covered by Automechanika Dubai, Asad Abbas Badami, Managing Director for A-Map, noted, “We have to be here because it is important for our identity in the automotive market and this is the only exhibition that puts all parts of the automotive industry together in one show.” Furthermore, Arnd Franz, Managing Director of MAHLE GmbH,

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said, “The main reason for MAHLE to participate at Automechanika is its consistent global concept, whether it takes place in Dubai, Shanghai or Frankfurt – the fair successfully orients on the aftermarket target group.” 125 companies participated within the Tyres & Batteries section which has grown from strength to strength in recent years, having increased by 28pc more exhibitors this year alone. Kenji Masuyama, General Manager, Commercial Tyre Marketing for first time participants Bridgestone, said, “The Middle East is one of our target markets and is a very important market for us,”

and long term exhibitor Surender S. Kandhari, Chairman at Al Dobowi Group, said, “This year we have met a lot of people from Europe, Asia and Africa and we will participate in Automechanika Dubai forever.” Exhibitors were also extremely optimistic at the response from trade buyers at the show and reported on positive business transactions, leads and new business enquiries. Arvind Poddar, Managing Director of Gold Sponsor BKT, said, “We are delighted with the response to our product line. Business leads that have been generated have been very encouraging.” Furthermore, Kash

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GLOBAL REPORT

Uttam, Managing Director, Shukralla General Trading Co. LLC, authorised distributor for Duracell automotive batteries in the UAE, said, “This is our official Middle East launch and I am confident that we will capture a good share of the automotive battery market in the UAE thanks to our participation here.” Furthermore, there was a positive vibe concerning the quality and diversity of trade visitors that passed by the participants’ stands throughout the three-day fair. Vahab Safaeian, Sales Executive at Samir Odeh Group, said, “It is a very good place to meet our customers. People working in the

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industry from Iran, KSA, Libya, Egypt and Kenya – all of them are here.” Christian Mack, Area Sales Manager, Middle East & Far East for SM Moterenteile, also commented, “We have met trade visitors from Iran and Pakistan and made very concrete new contacts.” Furthermore, Dmitriy Puzanov, Sales

Manager of Export Sales Department at WESTA ISIC, said, “We’ve had customers from all over the world.”

July 2013 / 61


GLOBAL REPORT

Corvette is

The iconic 60 years old

In June 2013, Chevrolet marked its 60th anniversary of the Corvette, an iconic American sports car. The first Corvette went into production in Flint, Mich. on June 30, 1953. Since then, Corvette has become an American icon that continues to offer the best in today’s technology and performance. “During the past six decades, the Corvette has been woven into the fabric of American culture, as the sports car of choice for movie stars, musicians and astronauts,” said

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Chris Perry, vice president, Chevrolet Marketing. “The very best Corvettes represent the state-of-the-art for their eras in terms of design, technology and performance.” Here are some key facts highlighting 60 years of Corvette history: • Corvette is the world’s longestrunning, continuously produced passenger car. The longest-running vehicle of any type is the Chevrolet Suburban. • Corvette made its debut as a

concept vehicle at the General Motors Autorama in New York City on January 17, 1953. It was such a success that a limited run of 300 production Corvettes began on June 30 of that year. • All 1953 models were Polo White with a red interior and they were priced at $3,498. In 2006, the third 1953 Corvette produced sold for a record $1.06 million at auction. • Corvette was exclusively available with an inline six-cylinder engine until 1955. That year, the optional

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GLOBAL REPORT

1965

V8 engine was ordered by 90pc of buyers. The six-cylinder was dropped in 1956. Corvette has been available exclusively with V8 power since. • Corvette was produced only as a convertible for its first 10 years. The fixed-roof 1963 “split-window” Corvette Sting Ray coupe launched the second-generation Corvette. Sales doubled and it became a year-round car for drivers in colder climates. • Approximately 1.56 million Corvettes have been produced since June 30, 1953. The 500,000th Corvette was built in 1977; the 1 millionth was built in 1992, and the 1.5 millionth Corvette rolled off the line in 2009. • Corvettes have been produced at three facilities: Flint, Mich. (1953); St. Louis, Mo., (1954-1981); and Bowling Green, Ky. (1981-2014). The change from St. Louis to Bowling Green happened during the production year. The first 1981 Corvette was built in St. Louis, and the last 1981 Corvette was built in Bowling Green. • No 1983 Corvettes were sold to the public. The model year was skipped in preparation for the allnew 1984 Corvette, which launched the C4 generation. Forty-four Corvette prototypes were built as 1983 models. Only one remains, and it is on display at the National Corvette Museum, in Bowling Green, Ky.

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July 2013 / 63


TECHNOLOGY

Vettel explores the future of

Formula One & road car technology

In his role as Infiniti Director of Performance, Vettel was joined by Infiniti Red Bull Racing Deputy Chief Designer Rob Gray to discuss the 2014 F1 technical regulations with Infiniti’s top engineers. Their key objective was to explore the future powertrain, hybrid technologies and energy recovery systems currently being developed at Infiniti’s UK facility. “With the technical challenges facing us for 2014, in particular the role that hybrid technology is set to play from a driving point of view, I was interested in hearing from Infiniti’s powertrain engineers about the advances they are making in this area.” said Vettel. “Key for me is to understand how we manage the smooth transition between the petrol and hybrid systems when I’m driving the car, and how we can get maximum precision and feel from energy recovery systems as they become more important to F1 next year.” Vettel and Gray spent the day with the Technical Center’s Vice President David Moss, Chief Marketability Engineer Jerry Hardcastle and Powertrain Manager Graeme Burn to discuss the future of power unit technology and how the technical collaboration between Infiniti and Infiniti Red Bull Racing can bring further benefits on the track and the road. One example of this future technology was put to the test by

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the World Championship leader as he took the wheel of an Infiniti M35h – the world’s fastest production hybrid - on one of the Center’s Homologation Dynamometers, alongside a powertrain specialist. “The laboratory test procedure gave Sebastian the opportunity to experience and evaluate areas like throttle response and regenerative braking power in an Infiniti road car”, said Graeme Burn. “Driving the Infiniti M35h on the dyno is very different to driving it on the road or track because you are able to concentrate completely on the vehicle’s drivetrain performance through a rapid series of acceleration, deceleration and gearchange manoeuvres specifically designed to put the system to the test. Sebastian was understandably demanding on the car because he wants to be sure this technology

delivers what he would expect from a premium performance sedan, as well as how it might feel under foot in a Formula One car.” Sebastian Vettel added, “Infiniti’s engineers have successfully combined performance, efficiency and driveability in the Infiniti M35h to deliver a hybrid car that is amazingly quick and responsive. We want to bring this knowledge into the team as we develop the 2014 race car, and I also think that future Infiniti road car powertrains can benefit from the lessons we learn in Formula One.” Commenting on the technical collaboration, Infiniti Red Bull Racing’s Rob Gray said, ”We have been working closely with Infiniti’s engineers and are already benefiting from this two-way sharing of technology expertise. As we head into 2014 with an increased focus

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TECHNOLOGY

on electric power unit technology and energy recovery, today’s visit, complete with Sebastian’s input, was a valuable insight into the power unit technology currently being worked on and there is plenty that both we and Infiniti can take from that.”

Another central theme for discussion was the future direction hybrid electric technology could take in both road and racing cars. Also available for Vettel and Gray to inspect were the all-new Infiniti Q50 Hybrid launching later this year and

the Cranfield-built high-performance Infiniti Emerg-e, a highly advanced EV sports car concept that combines all-electric drive with a rangeextender powertrain to deliver 402bhp and a total range of 300miles.

SKF to deliver wheel hub bearing units to Volvo Car Corporation

SKF has been awarded a contract to supply their next generation wheel hub bearing units (HBU3) to Volvo Car Corporation. SKF will supply the HBU3 specifically developed according to Volvo’s demanding technical specification for their scalable product architecture (SPA). “We are delighted to have been awarded the largest contract ever received by SKF from Volvo Car Corporation. It is also one of the most significant orders received from our automotive customers. Working in close cooperation, we used our technical knowledge and expertise to meet their very challenging requirements for a high performance design that meets their weight reduction goals. The robust technical solution that we have developed will be supplied to Volvo Car Corporation utilising our global manufacturing footprint”, says Tryggve Sthen, President, SKF Automotive. With SPA, Volvo Car Corporation is focusing on a lightweight automotive design with a goal

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to reduce the vehicle weight significantly, without negative impact on performance or comfort. The HBU3, optimised for reduced weight, includes high performance seals with reduced friction. This solution is robust and withstands more strain for increased reliability and prolonged life. SKF offers a complete portfolio of products and services to the automotive industry that help reduce CO2 emissions, including the next generation of low-friction, lightweight solutions to reduce emissions, increase fuel efficiency and compete in a rapidly changing market. SKF is a leading global supplier of bearings, seals, mechatronics, lubrication systems, and services which include technical support, maintenance and reliability services, engineering consulting and training. SKF is represented in more than 130 countries and has around 15,000 distributor locations worldwide. Annual sales in 2012 were SEK

64,757 million and the number of employees was 46,775. SKF Group started trading operations in India in Kolkata in 1923 and since then the Group’s operations have been consolidated into SKF India Limited. SKF India also has an associate company called SKF Technologies (India) Pvt. Ltd providing Sealing Solutions and Industrial Bearings. The company has manufacturing plants in Pune, Bangalore, and Haridwar

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TECHNOLOGY

Volvo extracts electric power, but

not from large batteries Consider a future where trucks and buses are continuously supplied with electric power without carrying large batteries. Instead, power lines are built into the surface of the road. This could be a future solution for long-distance trucks and buses running on electricity. The Volvo Group already has extensive knowledge about electric drivetrains, but in order to become world leading in sustainable transport solutions, the Volvo Group must find even more solutions that allow the vehicles to operate on renewable energy. A great deal of this energy will be distributed as electricity, but the challenge is all about supplying the vehicle with electricity power when needed. “In city traffic, there are currently various solutions and we are researching many others. We have field tests in progress where our plug-in buses are equipped with a battery that can be charged quickly when the buses are at bus stops,” says Mats Alaküla, the Volvo Group’s expert on electric vehicles and Professor at Lund University. But for long-distance trucks this will not work since they stop infrequently and to cope with this task they would need so many batteries that there would be no room for any cargo. Instead, a solution is required where power is continuously supplied to the truck from an external source. The Volvo Group participates in

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Volvo sees future long-haul trucks drawing the power they need from the road itself, making large onboard batteries a thing of the past.

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TECHNOLOGY

only delivered to a collector mounted at the rear of, or under, the truck if an appropriate signal is detected. As an additional safety measure, the current Richard Sebestyen, project manager, flows only when Volvo Group Trucks Technology the vehicle is moving at speeds greater than 60 kmph. rails, even when the vehicle is not “With this method, electric directly over the middle of the vehicles could be continuously contact lines. supplied with power without “We are currently testing how to carrying large batteries,” says Mats connect the electricity from the road Alaküla. “The power line will be built to the truck. The electricity flows in sections and one section is only into a water-cooled heating element, live as the truck passes.” with similar power requirement as an “The vehicle is equipped with electricity-driven truck,” says Richard a radio emitter, which the road Sebestyen, who is the project segments can sense,” explains manager at Volvo Group Trucks Mats Alaküla. “If an electric Technology, which is the Volvo vehicle passes a road Group’s research and development segment with a proper division. encrypted signal, then However, a great deal of research the road will energize the still remains before this can become segments that sense the a reality. It involves the continued vehicle.” technical development of the current The truck being used as a collector, electric motor and the test bed for the project is a control systems required. It also standard Volvo FH12 tractor involves road construction, road sporting a diesel engine. maintenance, electricity supply along There’s no electric motor the roads and various payment installed at the moment. models, etc. When the collector comes “A lot of years remain before this into contact with the power is on our roads,” says Mats Alaküla, lines, 750V of direct current “But, if we are to succeed in creating is delivered and routed to sustainable transport systems, we a water-cooled heating must invest significantly in research element that has a similar now. I am convinced that we will power requirement to an find a cost-efficient way to supply electrically-driven truck. electricity to vehicles in longMats Alaküla, the Volvo Group’s expert on The collector has been distance traffic and we have already electric vehicles designed to track the power come a long way in our research.”

a large Swedish research project to find solutions for this, with the support of the Swedish Energy Agency. The project includes the Swedish Transport Administration, Vattenfall, several universities, vehicle manufacturers and suppliers. Last year, Volvo built a 400metre long track at its testing facility in Hällered outside Gothenburg and the company has been testing the system since last autumn. The method currently being developed and tested by the Volvo Group, together with Alstom, entails two power lines built into the surface of the road along the entire length of the road. A current collector in contact with the power lines will be located on the truck. The two power rails/lines run along the road’s entire length. One is a positive pole, and the other is used to return the current. The lines are sectioned so that live current is

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July 2013 / 67


TECHNOLOGY

Nissan’s intelligent

self-cleaning rear view camera

The all-new Nissan Note is packed with innovative technology. Lane Departure Warning, Blind Spot Warning and Moving Object Detection combine to form the Nissan Safety Shield, complimenting the 360-degree helicopter view offered by the Around View Monitor parking aid to break new ground in the B-segment. But there’s one small yet highly significant innovation which ensures all of these functions are fully optimised - Nissan’s intelligent selfcleaning rear view camera. In order to make premium technology features accessible to the B-segment, Nissan’s engineers have developed all the functions of Safety Shield to rely on only the rear view camera. That means the costly radar, laser or front-facing camera technology needed by many premium models are not needed, and real-world cost savings are passed on to Note customers. However, with so many functions relying on the unblinking operation of the wide angle rear view camera, Nissan’s engineers realised the lens would need to be clear of dust and dirt at all times. Richard Picton, Nissan’s Safety Shield engineer takes up the story: “The rear camera is critical to the functionality of Safety Shield, as well as the rear view used for Around View Monitor. We couldn’t allow the camera’s lens to get dirty at any time because it would detract

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from the technology’s performance in everyday use with the customer. However, we didn’t want the task of cleaning the lens to fall at the hands of the driver, so the intelligent selfcleaning system was developed.” With no input from the driver the rear camera is kept clear of accumulated dirt or water drops. This fully automated function relies on advanced algorithms processing more than 3 million pixels from the rear camera every second to determine when the image is obscured. Inputs are also taken from windscreen wiper functions to help to ascertain the prevailing driving conditions. First the image from the camera is

received and processed into a view which the human eye can easily see. In order to see beyond 180-degrees, the lens protrudes from its position on the tailgate and has a ‘fish-eye’ shape. As a result it captures a stretched image that needs to be digitally remapped to appear on the flat 5.8-inch Connect screen on the Note’s dashboard. The downside of the camera’s location is that it is exposed to dirt, dust and water, which could obscure the image. So, the next step is a continual analysis which determines if the lens is dirty and then determines the type of grime that’s obscuring the picture. Intelligent enough to know the difference

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TECHNOLOGY

between mud or simply rain water, the self-cleaning system then uses its tiny water system and compressed air blower to clear the lens. Picton explains: “Light dust is best cleared with a blast of air. A splash of muddy water from a puddle will need a full wash, so water is squirted at the lens and blown off again with air.” There is even a function for rain,

where testing revealed that the best way to keep the camera functioning is to keep it wet with a very small but steady stream of water to avoid large water drops forming on the camera and obscuring the processed image. Extensive digital modelling and real-world testing has proven water consumption from the system to be minimal, drawing negligible

amounts from the Note’s standard windscreen washer vessel. The jet of air is fed from a tiny compressor mounted underneath the rear of the Note. Bringing premium technology and sharp design to the B-segment is at the core of the new Note’s appeal, with innovative thinking applied to all aspects of its design and engineering.

Mercedes

Williams F1 Team, announce engine partnership The Williams F1 Team and MercedesBenz have announced the signature of a long-term engine partnership from the 2014 Formula One World Championship season onwards. Under the terms of the agreement, Williams will be supplied with a Mercedes-Benz Power Unit (Internal Combustion Engine plus Energy Recovery System) by Mercedes AMG High Performance Powertrains (HPP) based in Brixworth, UK. Williams will continue to manufacture its own transmission. The 2014 regulations will set the sport’s engineers the challenge of completing a 300km race distance on a fuel load of just 100kg. To do so, teams will switch from naturally aspirated 2.4 litre V8 engines to 1.6 litre V6 turbocharged hybrid Power Units. To achieve power outputs comparable to current levels from the new Power Unit will require a 30pc increase in energy efficiency. This step forward will be largely

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achieved through an Energy Recovery System (ERS) that will be able to deploy ten times more energy than the current KERS. The new ERS will recover energy from both the exhaust turbine and the rear axle, as well as deploying energy back to both.

These new technical developments will offer significantly greater opportunities for technology transfer from Formula One to realworld applications in areas such as battery technology, turbocharging, energy recovery and combustion efficiency.

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TECHNOLOGY

electromobility

Efficient for city buses picks up speed

Dutch motor bus manufacturer VDL Bus & Coach is betting on the electrical wheel-hub drive from the German company Ziehl-Abegg (Künzelsau). As announced by VDL Bus & Coach commercial vehicles from the Citea series will come standard with the ZAwheel electric drive in the future. Previously, the drive system from Ziehl-Abegg (Kuenzelsau) was only used for retrofitting diesel buses. “Since VDL is one of the major European bus

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manufacturers, this underscores the significance of our drive system” says Peter Fenkl, the Chairman of the Board of Ziehl-Abegg on the step towards series production. Ziehl-Abegg is one of the leading international mechanical engineering companies (ventilation and drive technology). Drives from Ziehl-Abegg move both elevators as well as robots in the deep seas. The wheel-hub drive for city buses has been under development as far back

as 1998. The company worldwide has 3,150 employees who work for the hightech company. Sales in 2012 were 371 million euros. Two-thirds of the sales are from exports. The first brand-new VDL Citea Electric city bus with the electric drive from Ziehl-Abegg was presented in Geneva. The occasion was the World Congress of the International Association for Public Transport (UITP) and the Mobility

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TECHNOLOGY

and City Transport Exhibition. Ziehl-Abegg had received an Energy Globe Award at the start of April 2013 for the ZAwheel electric mobility system. The jury, chaired by the former Indian Minster of the Environment Maneka Gandhi, issued this substantiation for awarding the Environment Prize: “The electric drive from Ziehl-Abegg for commercial vehicles and motor buses or waste vehicles nearly completely eliminates both noise and pollutants.” That is because no CO2 and no NO2 accrue in the electric mode. Furthermore, people are spared 90pc of the road traffic noise and the energy consumption is halved. ZAwheel also brings along a great advantage over other systems during electromobility: Neither a transmission nor a differential is needed. These power gluttons are completely superfluous in the drive from Ziehl-Abegg because the engine – and a so-called wheel-hub motor – sit directly in the wheel. “The fact that this drive has been running with great success for years in several countries in field tests underlines the practical suitability” is how Fenkl emphasises the head start compared to other systems. In January, Ziehl-Abegg in Hohenlohe (South Germany) started the new construction of a factory for Drive Technology/Automotive. The investment costs for just the building amount to 24 million euros. Series production of the ZAwheel electrical wheel-hub drive is planned to start in the new factory. VDL Bus & Coach is located in Valkenswaard (near Eindhoven). The company is the Europe’s sixth largest bus manufacturer and has a 6 percent market share. VDL Bus & Coach’s main business is the development, production

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and sale of a wide range of buses, coaches and chassis modules with the related after-sales service along with the procurement and sale of used buses. VDL Bus & Coach comprises several bus manufacturers which cooperate on the global market. Production is based in Holland and Belgium. The VDL Bus & Coach products are sold through a global network of its own subsidiaries, importers and sales partners in more than 30

countries. That enables providing customised transport solutions. The customer can rely on employees who take smooth, rapid action at one of the numerous service points for maintenance and customer service. A very wide distribution network ensures that spare parts and bus-related products are available where needed as quickly as possible. VDL Bus & Coach has meanwhile developed into one of Europe’s largest bus manufacturers.

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INDUSTRY OVERVIEW Passenger Vehicle Manufacturers in India Total Domestic Sales + Exports - May 2013 1,89,355 Units

Ford 3.12%

GM 2.55%

Others 2.29%

VW 3.29% Toyota Kirloskar 3.66% Nissan Motor 5.06% Maruti Suzuki 38.59% Tata Motors 5.10%

Honda Cars 6.34%

Hyundai Motor 30%

OTHERS Skoda Auto India Pvt. Ltd. (0.99%)

Renault India Pvt. Ltd. (0.61%)

Mahindra & Mahindra Ltd. (0.24%)

Hindustan Motors Ltd. (0.12%)

Fiat India Automobiles Pvt. Ltd. (0.33%)

Based on SIAM figures

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INDUSTRY OVERVIEW Utility Vehicles Manufacturers in India Total Domestic Sales + Exports - May 2013 60,393 Units

General Motors 6.07 %

Others 1.18 %

Toyota Kirloskar 9.24%

Mahindra & Mahindra 39.48 % Renault India 11.03%

Tata Motors 13.78%

Maruti Suzuki 19.22 %

OTHERS Force Motors Ltd (0.38%)

Hindustan Motors (0.24%)

Nissan Motor India Pvt.Ltd. (0.20%)

Ford India Pvt. Ltd. (0.11%)

Honda Cars India Ltd. (0.11%)

Hyundai Motor India Ltd. (0.08%)

Skoda Auto India Pvt. Ltd (0.06%) Based on SIAM figures

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INDUSTRY OVERVIEW Two Wheeler Manufacturers in India

Total Domestic Sales + Exports - May 2013 13,54,354 Units

Others 1.87%

Suzuki Motorcycle India 2.10% Yamaha Motor 3.65%

TVS Motor 11.77% Hero MotoCorp 41.19 %

Honda Motorcycle & Scooter India 16.92%

Bajaj Auto 22.50%

OTHERS Royal Enfield (0.99%)

Mahindra Two Wheelers Ltd. (0.59%)

Piaggio Vehicles Pvt.Ltd. (0.28%)

H-D Motor Company India Pvt.Ltd. (0.01%)

Based on SIAM figures

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INDUSTRY OVERVIEW Three Wheelers in India

Total Domestic Sales + Exports - May 2013 61,089 Units

Scooters India 1.80% Atul Auto 4.12%

Force Motors 0.21%

Mahindra & Mahindra 6.78%

TVS Motor 9.40%

Bajaj Auto 56.59%

Piaggio Vehicles 21.10%

Based on SIAM figures

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INDUSTRY OVERVIEW Light Commercial Vehicle Manufacturers in India Total Domestic Sales + Exports - May 2013 40,579 Units

Mahindra Navistar 1.51%

Force Motors 4.43%

VECVs Eicher 2.82%

Piaggio Vehicles 1.02% SML Isuzu 1.12%

Hindustan Motors 0.03%

Ashok Leyland 5.75%

Tata Motors 50.98%

Mahindra & Mahindra 32.34%

Based on SIAM figures

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INDUSTRY OVERVIEW Medium & Heavy Commercial Vehicle Manufacturers in India Total Domestic Sales + Exports -May 2013 19,787 Units

SML Isuzu 3.54%

Asia Motor Works 2.58%

Others 2.4%

VECV - Eicher 12.85%

Tata Motors 53.70%

Ashok Leyland 24.93%

OTHERS Mahindra Navistar Automotives (1.88%)

Volvo Buses India Pvt. Ltd (0.28%)

VECVs - Volvo (0.24%)

Based on SIAM figures

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INDUSTRY OVERVIEW Auto Industry Overview

Total Domestic Sales + Exports - May 2013 17,25,557 Units

Three Wheelers 3.54%

Commercial Vehicles 3.50%

Passenger Vehicles 14.47%

Two Wheelers 78.49%

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RNI No DEL ENG/2010/34562


Motown India July 2013