We are expecting the industry to grow at double digits by 2020

At a time when pollution concerns are increasing, hybridisation and electrification will be trends that will grow with time. Even though there are hurdles such as high production costs, dependence on China for raw materials, lack of infrastructure, poor technical know-how in power electronics, among others, Aditya Bhartia, Managing Director, ADVIK Hi-Tech Pvt Ltd believes this can be overcome by emphasizing on upgrading manpower skills to meet the new technology requirements. In this interview with Neellohit Banerjee, Aditya Bhartia observes how the BS VI norms can pave the way for bio fuels and make it a thing of the future.

Tell us about your business in the automotive component manufacturing space. How is it performing currently?

We are a global manufacturer of auto-components including lifter tensioner, oil pump assembly, combi brake system, water pump assembly, fuel pumps, fuel feed pumps, fuel cock assembly, decompression units, drum gear shifter, starter gear reduction, kick shaft assembly, gear shifter assembly and precise machined components like pinions, screws, nuts and control shafts. Our clients comprise of leading automotive Original Equipment Manufacturers (OEM) in the two-wheeler (2W), three-wheeler (3W), four-wheeler (4W), light commercial vehicle (LCV), medium and heavy commercial vehicle (M & HCV) and stationary engines space including global majors namely Baja Auto, Ducati Motor, Harley Davidson, Hero MotoCorp., Honda Globally, Kawasaki, Mahindra, Yamaha Globally, Piaggio Vehicles, PT Astra Honda Motor, Suzuki Motorcycle, Tata, ZF, etc. We continue to remain bullish about the market and are looking to close this year with a target turnover of close to Rs 625 crore, growing at the rate of 25 per cent over last year. Exports will contribute close to 20 per cent of the turnover.

Advik will be opening its third plant in Pune. How big an achievement is it for the company?

With this addition, the Advik Group now comprises of nine production facilities spread across India, Indonesia and Vietnam. Our ninth plant is a testament to our policy of staying ahead of the technology curve and creating the capacity to meet future market demand. Though we expect 2019-20 to be a comparatively slow year due to a number of change points, including implementation of safety norms, BS VI etc., we are expecting the industry to bounce back and grow at double digits again by 2020.

Among the products that Advik manufactures, which product has the highest demand currently and why?

Today ADVIK Hi-Tech is the world leader in the manufacturing of oil pumps, water pumps, tensioners and CBS – Combined Braking System in the 2W and 4W segment. Our continual focus on ground-up innovation and optimising our manufacturing capabilities has enabled us to offer tailor-made solutions for our customers' requirements and remain their preferred supplier. In the last 12 months, we have added two new prestigious customers. Going forward, we expect to see higher demand in all product categories we manufacture.

Tell us in detail on how big a role will vehicle electrification and hybridisation play in pushing this industry?

With growing pollutions concerns, and the need to reduce dependence on imported fuel and evolving customer demands, both vehicle electrification and hybridisation are definitely trends that will grow with time. We also believe bio fuels will be a big thing in India going forward, given that it solves the problem of oil imports to some extent, but it further provides a dual source of income to farmers and enhances their income. It will also reduce the problem of pollution caused by crop burning in large cities like Delhi. Having said that, for electric we also have to take into consideration that the existing challenges of high production costs, dependence on China for raw materials, lack of infrastructure, poor technical know-how in power electronics, limited driving range and lengthy charging times continue to affect the viability of these solutions.

In the near future in India, the need to comply with BS VI and CAFÉ regulations will push a low to medium level increase in hybridisation in entry-level vehicle segments (sub-Rs 6 lakh segments), whereas the more premium segment cars will see an increased uptake of electric technology systems.

But globally, we cannot ignore the fact that EV adoption is picking up in markets, especially Europe, and if the Indian auto industry wants to leverage on this disruptive trend, we will have to gradually create whole new ecosystems. To start with, the industry has to focus on upgrading manpower skills to meet the new technology requirements and optimise the manufacturing process by decreasing waste and unplanned downtimes.

As we further evolve, changes required will include increased investments in R&D, adapting or upgrading production processes (especially for manufacturers of conventional engine components) and exploring collaborations and strategic partnerships. Collaborations can help the domestic players to rapidly gain access to the latest technology and reduce allied costs by distributing them over a wider number of players.

Going forward, as the use of embedded systems and emission technology goes up, I also expect to see a growing partnership of automotive manufacturers with non-traditional partners like large technology companies and startups. Besides this, supportive government policies, and incentives and advancements in the lithium-ion battery technology can provide an impetus to the industry.

How is the industry preparing for the Bharat Stage VI emission norms?

Our focus on innovation from the ground up has allowed us to view the shift to BS VI as a big opportunity. Plus the scale-up of technology is big. It entails not only development but also testing of the technology across multiple product platforms and terrains, and in different environmental conditions, while maintaining economies of scale. This both takes time and skilled resources, both of which are limited. Another challenge is to create smaller and lighter parts that can fit into a limited space without comprising on quality or fuel efficiency.

Given the push towards light weighting, how can the components be made more friendly for making a vehicle lighter?

Light weighting is basically towards achieving higher fuel efficiencies. This is a step in the right direction. We continuously look at VA/VE opportunities to remove Mudas from our product and processes.

What are the emerging trends that are dominating the industry at present?

Briefly there are 5 major trends defining the industry, namely BS VI norms, electrification, growing customer demand for connected and crossover vehicles, bio fuels and safety systems. We see bio fuel as a real big opportunity. You may have read recently, a SpiceJet plane was flown in India with 100 per cent bio fuel. We believe this would be the right solution for India given the farmers’ income, availability of farm produce, pollution caused due to crop residual burning, and reduction in imports. This we believe is an area the government must incentivise, as it will be Indian engineering for Indian conditions and fit for the Indian ecosystem. Also, with the phase-wise implementation of the Bharat New Vehicle Safety Assessment Programme, the development and uptake of advanced driver-assistance systems and embedded software for vehicles will go up. This can further open up opportunities for both Indian IT and auto-component players.

What is your opinion on the future of this industry? Where do you see it going in the next two years?

2019 is going to be a challenging year from sales numbers and future technology development perspective. Due to the high change points, it is bound to create some amount of confusion and price escalations in the market. We see the numbers game settling down in 2020, but technology part becoming clear will take at least three or four years.

Finally, if you can end by sharing the future growth plans for Advik?

We are in the midst of exciting times in the automobile industry and hope to leverage the market disruptions to grow our scale and depth of operation.