Interview with Rama Shankar Pandey, MD, Hella India Lighting (HIL)

Company Description: Hella India Lighting (HIL) is a subsidiary of HellaKGaA Hueck& Co, Germany and is into manufacturing and marketing of automotive lights of commercial vehicles along with Agro and other Special Original Equipment (SOE) groups like construction, mining etc. Hella originally established itself in India in the year 1959 as a joint venture with JMA. With a manufacturing location in Derabassi, near Chandigarh, the company works closely with local SOE customers such as Tata Motors, Ashok Leyland, Volvo, Mahindra & Mahindra, AMW, JCB, Mercedes-Benz, SAME, CLAAS and with Independent After Market (IAM) customers to develop and manufacture head lamps, tail lamps, aux lamps, fog lamps, work lamps, day time running lamps with bulb & led technology and various types of switches. The company is ISO/TS 16949 certified. HIL has recently launched its company vision as “Technology of Tomorrow for the Life of Today, on Indian Roads”. The company has launched an ambitious ‘Nation Wide Road Safety Mission’ as part of its core strategy.

How do you see the automotive lighting industry in India evolving over the years?

When Tata started rolling out trucks in India, we also began our alliance with them. So we initially started as a JV with JMA and started making horns and lights in the initial phase. The Indian auto lighting witnessed a gradual evolution even though we lost pace with global technology in the middle of our course of action.  By this, I am specifically referring to the CV industry in the country. The design and technological properties (of the lights) remain the same as earlier. So we can bring in a lot of design and technical capabilities in the upcoming products of our clients and change the landscape further.

How important is the Indian market for HIL globally? And with the recurrent economic slowdown, are you redrawing your expansion plans?

It is true that the automotive industry has been cyclical and ideally it is best not to forecast anything (growth) at this moment. So a firm has to be very agile and flexible in order to take on these cyclical effects of the industry. The long term potential of the Indian automotive industry is huge and we will not go slow on our investment plans. Within Asia, even though our market development activities started later vis-à-vis China, we are taking full advantage of Hella’s global network to achieve the ‘Technology Jump’ while building our production and development infrastructure in the country. Our parent company in Germany has figured India among the strategic key markets in the world. So we are definitely building up our infrastructure here.

How much does the automotive vertical contribute to your overall business?

We are only in the automotive space in the current period. We are having a small vertical in the special application called “Hella Industries”. But this is still very nascent and yet to take shape. So we are focussing only in the automotive vertical.

Which specific segment in the automotive industry gives you the maximum volumes? And is there a segment which you find very promising?

For us, the biggest contribution comes from the automotive industry. So the maximum volumes are derived from trucks and buses. With the entry of high-end players like Volvo, Scania, and Mercedes Benz, a lot of buses are offered with next-generation lighting technologies. Many models equipped with projector lamps in these buses are supported by us. So we are pretty hopeful that the CV industry will witness the adoption of many high-end technologies. In addition to that, we are catering to other segments like SUVs and cars through our Aftermarket channel.

You have recently developed a highly indigenised light emitting diode (LED) lamp for commercial vehicles. Could you talk a little bit about that?

Yes, we have developed India’s first fully-built light emitting diode (LED) lamps for CV application at its Chandigarh plant. We realised that we can make a big difference (in CVs) by ensuring that there is safety on the road. So it’s a product which is ahead of the curve and is also affordable because of the heavy local content. The special features of the newly-developed product include up to 90pc less power consumption, superior lens and optic material, ultra-wide visibility optic, high UV resistance, completely water-proof IPK system, and extra-high vibration and temperature control. It also carries a five-year warranty for commercial vehicles, which is a real bonanza for vehicle operators. The product is fully tested and certified before being supplied to the customers. Even though the purchase price of the product will be higher, the maintenance costs are very minuscule. This product has been approved technically by reputed CV OEMs in India, and Ashok Leyland has started using the same.  We are holding similar discussions with other OEMs too. The product is now undergoing trial with fleet operators like VRL Logistics.

HIL has also adopted a new strategy to reorient its future activities towards ensuring road safety in India? Could you shed some light on that?

Since 2008-09, we were a bit struggling as we wanted to come out of our JV with JMA. As we became a Hella-owned company, we were striving for profitability as we had accumulated losses in crores at that point of time. So we were initially focussed on improving the bottomline by improving sales and winning back our lost customers. This was achieved by improving the quality of our plant (at Chandigarh) and get into a profitmaking mode. By 2011, we improved our financial health and by then our parent company also expressed a lot of interest in the Indian market. So thenceforth, we reoriented ourselves and laid out some well-defined plans wherein we met most of our customers to know their demands and needs. We then came up with a strategy that dealt with the menace of road deaths (in India). The latest statistics reveal that there are more than one lakh deaths occurring due to road accidents. Hence the company is committed to road safety by launching safety enabling products, enhancing awareness of risks involved in night driving and also by attracting the attention of NGOs, Industry associations like ACMA-Automechanika, and Government departments like NHAI, to the seriousness of the problem. This is in line with the company motto of ‘Technology of Tomorrow for the Life of Today’. So we made a vision statement that by 2020, we should impact reducing the number of road accidents by 10pc.

Where do you build your products? Are you planning to have a dedicated facility for auto lighting solutions?

We are running our manufacturing unit at Dera Bassi near Chandigarh. The state-of-the-art facility has been refurbished with fresh investments worth €2 million. We are able to produce 75,000 headlamps and 70,000-75,000 tail lamps per month and can also churn out 80,000 LED lamps per year from this facility.  The plant supplies to Tata Motors, Ashok Leyland and other leading CV makers. We simply follow the ‘Blue Ocean’ strategy to explore virgin market space like developing LED application in CV’s, Agro & Construction segment where Indian market has a lot of potential. Nearly 53 pc of the output is catered to the aftermarket vertical and roughly 15pc (out of the total production) is exported to countries like Europe, Singapore, Dubai, South Africa, Germany, etc. We have also garnered sizeable orders from Hella US,

So the German OEMs are giving you the maximum orders?

We are getting excellent response from German OEMs. They are in fact our lead customers for bringing high tech products for ‘Road Safety’.  As the competition is increasing in the CV industry, there is a trend among Indian OEM’s to adopt global benchmark on using lighting components. One of the successful example is Ashok Leyland started using fully built LED tail lamps for their new Intermediate Commercial Vehicle (ICV) platform. We have a balanced customer portfolio. Going forward, I foresee enhanced business opportunities not only from German automakers, but from European ones and others too.

You have kickstarted the Hella Value Partners (HVP) programme in 2011.  Does that mean the aftermarket vertical is indispensable for you?

As I mentioned earlier, the aftermarket vertical is indispensable not only in India but worldwide too. In fact, it is one of the three key pillars of growth. We are growing our retail base from 8,000 franchised outlets currently to nearly 45,000 outlets in the next two years. Through the Hella Value Partners (HVP) programme, select key partners across the region are awarded the status of HVP and are fully backed by Hella with direct access to the company’s expertise in the areas of sales support, marketing expertise, product and technical know-how support and reliable logistics service. We don’t believe in the principal-agent relationship with our dealers. They are like our business partners.

Could you talk a little bit about your R&D centre at Chennai?

Our Engineering centre of Hella India Automotive (HIA) at Chennai is working for both domestic and overseas markets for lighting development. It is into design, development, simulation and allied activities in automotive lighting domain. So there are more than 120 engineers who are working on next-generation solutions for the global auto lighting industry.

Lastly, do you foresee a lot of growth in India in the next few years in your line of business?

What kind of revenues are you looking at in HIL?

When I started as Director on the board of HIL in 2009, the company finished 2008-09 with 28 crore-annual business. During last fiscal year we closed at 74 crore and in the current fiscal, we should be clocking close to 90 crore in revenues.