Ancillaries take to high-end workstations

The $1 billion (Rs 4,600 crore) Hewlett-Packard India has identified small and medium scale (SME) automotive component manufacturers in India as potential consumers for the company’s high-end workstations. Growing demand from these companies will drive HP’s revenues in the country which are expected to double from the current level of $40 million (Rs 184 crore) to at least Rs 368 crore in a year’s time.

With the Indian automotive industry recording consistent double-digit growth, there has been a growing demand for workstations in the process of designing and manufacturing of automobiles and auto components. Speaking to Autocar Professional, Nitin Seth, HP India’s country manager – workstations, says that workstations are the technology tools that provide value to organisations and allow them to build on their business leadership.

More than 50 percent of HP India’s business for workstations comes from manufacturing. Of this, around 75 percent is from the automotive industry alone. The company is now targetting SMEs in the component industry as its major growth area in India. According to Seth, while there are around 25 to 50 large OEMs, there are around 500 ancillary players spread across India, who also have huge potential. “There is lots of action happening there. There are companies that have started with one or two machines, and today have a design set-up of 10-plus machines,” he notes.

The workstations business comprises two parts: the Unix-centric business where HP competes with players like Sun and Silicon Graphics, and the open Windows platform, where huge adoption has taken place due to price reduction based on the Intel or Window or Intel or Linux combination. HP is the leading player in India with an over 50 percent market share. In the manufacturing arena, the share is even higher at around 65 percent with the rivals being Dell and IBM.

BIG BUSINESS

Close to 40 percent of HP India’s workstations business comes from the automotive industry, OEMs and ancillaries. In terms of numbers, the company sells around 1500 boxes in a month, 500 of them to the auto industry; prices start at around Rs 50,000 and go up to Rs 5 lakh, depending on the specific requirement. Of the ancillary companies that HP caters to, around 100-odd would be in the Tier-1 category. “There is lots of action in the Tier-2 and Tier-3 categories and down the line type of automotive ancillaries. We in HP are looking beyond the top 100 because we are optimistic about the Tier-2 and 3 players. For example, as Bharat Forge becomes bigger, it is going to outsource within the country.

“For the workstation business we are at $40-odd million revenues, which is less than five percent of overall HP business. I belong to the personal systems group whose business is around $500 million annually. We are already a $1 billion company in India. We have an imaging and printing group and we also have the technologies solution group,” says Seth.

##### Seth affirms that the last two years have seen rapid growth for HP in India in terms of technology adoption. A case in point, he says, is the Sonalika Group’s International Tractors. “They are not ancillary manufacturers per se. We are enthused by the adoption of workstations in their plant in Hoshiarpur. They started with sub-five numbers but in the past two years have been purchasing 10 to 15 machines every six months. At present, the Hoshiarpur plant has close to 50 to 100 machines. That is the biggest testimony of our strength in the marketplace,” he says.

ADOPTING NEW TECH

The past decade has seen Indian industry take to high-end computers in a big way. With design playing an increasingly key role and the availability of software in the CAD/CAM domain, manufacturers now prefer to implement many operations in-house. “We now have all types of OEMs with hundreds of design sheets implemented. Maruti, which earlier used to get technology from its parent company, today has over 100 engineers spread between R&D, production engineering, and die-casting, among other operations. Clearly, technology adoption of workstations is playing a key role for the automotive industry in India,” remarks Seth.

“The automotive industry is hi-tech when it comes to equipment in terms of design type, quality and safety standards. Over the past three decades, all the automotive majors worldwide have used workstation technology. And, in the last 10 to 15 years, the automotive design cycle in India has also matured. Our local OEMs, be it Tata Motors, M&M or TVS, understand that it is cutting edge design that is key to their survival. The Indica, Scorpio, and TVS’ new bikes are all based on the usage of workstations. Workstations have become the backbone, the workhorse in combination with the commercial design softwares on which the OEMs design their equipment,” notes Seth.

PRODUCT DESIGN

One needs to look at the entire value chain as to how an automotive component-maker or an automotive OEM designs its product. It all starts with an industrial design where the look and feel comes into the picture at a hypothetical level. That gives rise to a more intense modelling requirements moving forward to things like analyses and manufacturing.

“Today you can do tool-less design. So you really do all designs on the computer, starting with computer-aided industrial design (CAID) taking it to computer-aided design (CAD) and computer-aided engineering (CAE). In all these domains, there are niche softwares available and HP partners with them to offer solutions to its customers on the workstation front. This is where the workstation helps provide cutting-edge technology to component-makers, OEMS, or in the automotive manufacturing value chain,” says Seth.

##### He points out that in the developed world, there are companies like BMW whose dealers offer a walk-in experience to a prospective buyer which involves him making a choice on the various configurations possible on a vehicle. Workstation technology makes this possible. While the buyer cannot change the component or chassis level of manufacturing, he has various options to choose from in the interiors which could be available in 15 to 20 different configurations.

TECH PROPELS GROWTH

“In today’s OEM world the adoption of workstation technology is vital. While the last decade has belonged to the IT world and companies like Infosys and Wipro, in the Indian automotive arena, this decade is for OEMs. Already companies like Bharat Forge and Sona Koyo are raging successes. Worldwide, there are majors like GM, Toyota and Honda among others which are between $50-$100 billion. So look at the amount of OEM action in terms of ancillaries that could come to India.

"Clearly, the auto ancillary business in India is poised for very big growth. Bharat Forge is the No. 2 forging company in the world and we have players like Sundaram Clayton, Sona Group and the Motherson Group that have very big plans in the global arena. All of them are taking their design capabilities to a number of these OEMs. I believe the auto ancillaries will become as big, if not bigger, than the automotive OEMs. Companies like M&M have equal investment in their ancillary business, from where the next phase of their growth will come. And the Tatas with TACO and its large number of ancillary units is testimony of how growth is possible,” says Seth.

He says that since manufacturing companies require a very high level of testing, adherence and solution tools, complicated software cannot be loaded on a simple PC. “That’s where the HP edge called ‘certification’ helps. While software providers become the independent software vendors (there are close to 50 to 100 in India in various domains), HP partners with a bulk of them to do certification, testing, and optimum performance rating.

“A workstation could start at a PC type of price point which could be around $1000 (Rs 46,000) and going up to tens of thousands of dollars depending on the requirement. For instance, to create a whole walkthrough for BMW, the touch-and-feel kind of thing, it could be a $100,000 (Rs 4.6 lakh) solution involving creation of a cluster of workstations. The umbilical chord, which joins the whole solution, is the certification and the promise of optimum performance of HP. That is really the key,” concludes Seth.