Interview with Dr. Ravi Damodaran
President- Technology & Strategy, Varroc Engineering Pvt Ltd
Date:
23 Aug 2015
| Author: P.Tharyan
Photography: Mohd Nasir
Varroc makes a diversified portfolio of products for the two wheeler
industry and is perhaps the largest supplier in the two wheeler industry. Is
this portfolio more or less complete or is the company exploring newer
products?
Varroc has probably the most
diverse portfolio of products for the two wheeler industry ranging from
plastics to electrical, electronics and metallic products for powertrains. We
even make catalytic converters. We are in the process of transforming ourselves
from a component supplier to a system supplier and this means two things. There
will be a continuous churn of products as well as consolidation of products.
For example we make electronic control systems for ignition as well as metallic
transmission assemblies. The future belongs to electronically controlled
transmissions for IC engines. With our control technologies and knowledge of
transmission products, this would be a natural metamorphosis. Besides we are
discussing future products based on the market trends and moves and these will
add more product lines. Hybrid and electric vehicles will be very disruptive to
existing suppliers to IC engine two wheelers and we are preparing for this
changeover as well.
The Triom acquisition helped you both in India and overseas. What were
the obvious rub-offs, post this acquisition?
The impact of Triom
acquisition for both our Indian and overseas business has been very slow to
take shape since we expect most of the benefits to impact engineering
capabilities in India and addition of Japanese OEM business in Vietnam. Both of
these as you know are long lead items and these are taking shape. We should be
able to see visible impacts in terms of customer wins or new product launches
next year.
What is the current share of the two wheeler business in your total
business pie?
Two wheeler business is
roughly 35pc of our overall business and it has been so for the past two years
as we continue to grow both our passenger car and two wheeler business at the
same rates, despite them being in different markets and regions.
In early 2015 you entered into a technical collaboration with Scorpion
Automotive. What has been the progress till now, both for the two and four
wheeler segments?
The technical collaboration
with Scorpion Automotive was to develop security systems for the Indian market.
As you know the Indian market has seen launches of bike locators by two OEMs
last quarter which is the first step to putting full-fledged security systems
in a bike. It is interesting to understand this launch. Bike locators by
themselves are of use in crowded parking areas, which is increasingly common in
parking lots. These use pretty much the same wireless technologies as in an
immobilizer. Normally bike locators are a feature on security systems. Bike
thefts on the other hand are a common disease in India and surprisingly OEMs
have not put a solution in place although these exist in the passenger car
market today. We have developed prototypes of full-fledged security systems
with RFID immobilizers, alarms and bike locators for technology demonstrations
and have already engaged with major OEMs to spread awareness on the utility of
these systems. We would be focusing entirely on the two wheeler segment for
this product since on the passenger cars, security is covered generally as part
of other systems such as engine management system.
Your company has targetted an ambitious Rs 20000 crore turnover by
2020...up from around Rs 8000 crore.....Has the company zeroed in on any
targets for the inorganic route?
Our strategy for 2020 in terms
of products, geographies we have to expand to are pretty much in place and we
have been continuously evaluating targets. The broad areas to expand obviously
are in the field of electronics, fuel efficient powertrains and exterior
lighting. We have not narrowed down on any targets yet as the field is large
and none meet our criteria in totality as of today. The process is slow and we
are being cautious and choosy about it. World class technology acquisition in
these fields is an element we do not want to compromise with and so we are
prepared to wait for the right opportunity to come along.
In the two wheeler space, are you exploring business with the makers of
superbikes? If yes, elaborate.
We do supply transmission
gears to Harley Davidson in India and Ducati in Italy even today. Besides, we
supply lighting to superbikes in Italy and are developing lighting solutions
for superbikes in India also. So the thought process is very much there in our
scheme of things. I talked about future products such as electric vehicles,
hybrids, electronically control transmissions and products such as security systems
some of which are at a testing stage with many OEMs. Our penetration strategy
for some of these may include superbikes as a natural entry point. This is
something we are evaluating as we prefer to be a supplier to the mass market
and a niche market entry is not alien to us.
Within your product portfolio, which are the ones where the company
will see a lot of action in terms of technological challenges and also
increased production?
I think the technology
challenges are there in both our proprietary as well as the build to print
parts such as polymer and metallic products. This is more so because of the
aggressive targets we have set for ourselves to build technology capability
ahead of market demands. Transitioning from build to print parts to art to part
is a challenge for polymer and metallic products. We have already moved along
in air filters where we are not developing our own designs for production programs
with major OEMs. Transmission and valvetrain designs are also on the block and
these will be much longer lead times. For electric and electronic parts the
challenges are driven by the disruption that we expect from the introduction of
electric and hybrid vehicles driven by the newly launched FAME initiative. To
be an indigenous supplier of control systems and motors to EVs and hybrids is a
great opportunity for us, but the building of technology capability is not
going to be easy. We are glad that we have started on that journey.
Are you on track to fulfilling the company 2020 vision plan?
Yes. On the revenue front we
have grown two and a half times in the past 3 years and we have to repeat that
in the next five years. On the financial front we continue to show healthy
performance to enable consistent investments in all the regions of the world
where we have operations. The major achievement of turning around our VLS
operations in Mexico is a tribute to the way our teams handle our business.
Having a strategy in place surely helps us prepare. The softer aspects of
building the talent pool of skilled workers for automated production systems,
engineering talent for building innovation factories and management bandwidth
to handle the scale and complexities that come with the growth are something
that we have recognized 4 years back and is quite challenging in the Indian
businesses.
