Interview with Shashi Singh, Managing Director, AVL India

Company Description: AVL India is a joint venture with AVL List GmbH, Graz, Austria, which is the world’s largest privately owned and independent company for the development of powertrain systems with internal combustion engines, pollution monitoring equipment, as well as engine instrumentation and test systems. Incorporated in 1984, AVL India started production of these equipments in 1992. Today the company is a leading manufacturer of diesel smoke meters, exhaust gas analysers, computerised pollution monitoring equipment for diesel & petrol vehicles and other engine diagnostic equipments. Having started operation in the Indian market with just half a dozen people, it has now grown to an organisation of more than 300 people and most of the employees are engineers and are based at Gurgaon in a 10,000sqm. AVL India also has a software unit called AVL India Software, which is engaged in providing business and customised solutions to its global clients.

It’s a known fact that AVL India, a wholly-owned subsidiary of Austrian AVL, the technology solutions provider in powertrain engineering, instrumentation and test systems. But what kind of services have you offered specifically to Indian OEMs? Can you shed some light on that?

Basically we have two divisions. One is into supplying engineering services for the powertrain (engines+transmissions). So we design and develop new engines and transmissions and also  upgrade or downgrade existing engines as per the requirement of the OEMs. These kinds of services, which are offered to both domestic and multinational OEMs, are done jointly in India and our global headquarters in Austria. However, for high-end products like Euro-VI engines, etc, all the activities are carried out in Europe. We are also engaged in the development and export of state-of-the-art software for instrumentation and engine test systems. We also manufacture instruments in Gurgaon. We have sales and support structures in most of the automotive hubs in India.

As far as your powertrain expertise is concerned, you have worked with a number of OEMs? But have you been able to set any benchmarks in technology upgradation?

We are doing a fair amount of work on hybrid vehicles. And I think we are the only company which is doing a dedicated hybrid programme for Indian OEMs. As Mahindra & Mahindra (M&M) has allowed us to talk about it, I can share that they are working on a hybrid-diesel SUV in association with us. The vehicle is expected to be on a new platform and AVL has been entrusted with engineering the powertrain and providing hybrid systems. We are also working with a number of automakers to reduce the cost of the vehicle without using any aftertreatment devices like catalytic convertors, etc.

You had earlier set up an AVL India Skills Centre in New Delhi which offers training on all AVL instrumentation test applications, systems and equipment. How is it helping AVL India?

The Skill Centre is helping both AVL India and its clients. The equipment that we supply for high-end work involves a lot of training and application know-how. Moreover, we have to deal with after-sales service and warranty-related issues of our products. To increase our focus on the Indian automotive industry and to ensure that its engineers’ skills are honed further, AVL has set up an ‘AVL India Skills Centre’ in New Delhi. It will offer training on all AVL instrumentation test applications, systems and equipment. We call trainers from all over the world for training of engineers from OEMs. And this is a paid service. We have also introduced support at the customer site and Help Desk Support (Hotline) in order to provide the user with comprehensive assistance during daily operation. The Start-up / Operation Support helps to get newly introduced systems into productive operation quickly. AVL experts assist in optimising running test facilities and specific testing tasks. Help Desk Support is provided as Hotline or AVL CAREline. Most of the problems are resolved on telephone.

If I am not mistaken, AVL India is eyeing projects for helping build technical centres of engine manufacturers. You are also involved in providing infrastructure and testing equipment and also training manpower. But what about your own R&D centre?

Our technical centre, which began its operations in 2002, is focussed on engine research and development. Nearly Rs. 80 crore was spent on it. Any engine upgradation can be outsourced by any OEMs (both domestic and international) to us. This centre, which has a total strength of around 125 people, is actively involved in global projects. We send these boffins to Austria for training and other projects. If we need any high-end expertise, our engineers from Graz are flown in here. They give us inputs on transmission development too.

Hero MotoCorp has gone on record saying that it has already tied-up with AVL for bike and engine technologies? Could you shed some light on that?

Yes, you are correct. While Hero MotoCorp has already begun investing in its in-house R&D capabilities, the two wheeler maker has just announced a tie up with us to develop a new range of engines that will propel Hero MotoCorp into the future. Hero’s team, in close coordination with AVL India Technical Center, is working on a few options across motorcycles and scooters. There could be two aspects to it. One is driven by emissions that the automakers need to comply with. The other is designing a new engine. We are aware that Hero MotoCorp has a royalty based technical agreement with Japanese two-wheeler giant Honda until 2014 for using engine technology. Even though we would not replace Honda, we would be one of Hero MotoCorp’s technology partners in the future. We would be developing engines of all sizes to make new products and also refurbish the existing product lines.

AVL has launched its compact product range to help engineers in the automotive industry get reliable measurement results. And what does the range include? And what are its price tags?

This is quite a big topic. AVL globally produces sophisticated products to meet Euro-V and Euro-VI emission norms. But in India, such sophisticated technologies are incompatible. Having said that, parameters like accuracy, quality, etc are still required here. So we decided three years ago to form a joint development team between AVL India and AVL Graz to produce instruments that can meet Indian and other developing markets’ requirements. So we came up with this compact product range to help engineers in the automotive industry get reliable measurement results. We rolled out a couple of these products in India. Going forward, we would like to manufacture as many instruments as possible. The products are 30-40pc cheaper than what our global unit is producing.

There has been an influx of global players into India for the past 5 years. Moreover, there are new players setting up their shops here? So do you expect enhanced business opportunities? If yes, can you run us through it?

For us, there are two aspects of business. While one is emission-driven, the other one is underpinned by competition. As the market demands better products, the automakers will come to us. The more competitive the market gets, the better it is for AVL’s business. Moreover, as Indian OEMs go global, they seek our expertise to develop products for matured markets like Europe, United States, etc.

A lot of wannabe car buyers are shifting to diesel versions. So has there been any shift in your strategy?

No, I don’t think so. The ‘AVL’ name is synonymous with diesel. We started as a diesel-centric company in the 40s. And we were the first ones to propagate direct injected diesel engines that meet NVH challenges. We have been doing a lot of diesel-related work in India. AVL was founded by Professor Doctor Hans List in 1948, after he became an independent engineer. The company was primarily focused on diesel truck engines, and after great success, branched out in 1960 to include an engine instrumentation division.

Is the LCV segment something which you are eyeing aggressively? And do you get good margins on that?

I would say the LCV is one of the booming segments in the Indian automobile industry. But with the construction of national highways, even 40+ tonne trucks are doing brisk business. These products are made by Indian OEMs in association with their JV partners and engines are insourced from Cummins, etc. But small light trucks like the Tata Ace, Mahindra Maxximo, etc, were never available abroad. This segment has been completely unexplored. We are actively allying with Indian truckmakers to make transmissions for such light trucks.

Are your services available for component manufacturers also, besides automobile manufacturers?

Yes, we work with a number of tier-I suppliers like Bosch, Delphi, Denso, etc. Now we are extending our services to auto parts makers who are looking to upgrade and test their products.  This is because the concept of ‘Indian Auto Component Manufacturer Partly Responsible For Manufacturing Defects’ is fast catching up.

How much, in terms of percentage, is AVL India able to generate its business from India? How pertinent is the Indian market in your global set up, especially in the Asia Pacific area? Last but not the least, what is your vision for the company? What new trends will you see with your clients?

At the moment, our turnover is about 50-60 million Euros, which is about 300 crore.  AVL globally has clocked 850 million Euros. So we are just below 10pc. In the Asia pacific operations, we are second only to China (at 100-120 million Euros). We are hopeful to post a growth of 20-30pc on a CAGR basis in the next few years. My vision for the company would be able to get into hybrids, where we have a negligible presence. This is because most of such activities happen in Germany, Austria, and the US. In our AVL perspective, about 20-30pc of the powertrain will be into electrification or hybridisation in ten years time .We will also zero in on reduction in Co2 emissions which is also a big challenge.