Cummins Exhaust aims for leadership

The recent awards of BS3 business from the two major Indian truck and bus OEMs, Cummins Exhaust India Ltd (CEIL) is set to become the leader in the market for acoustic mufflers that go onto heavy commercial vehicles. Apart from mufflers in mild steel and aluminised steel, the company also produces accessories like spark arresters and bent tubes, and diesel and natural gas oxidation catalysts.

Cummins Exhaust is at present the only supplier of silencers for power generators and industrial machinery in the organised sector and covers almost the entire range in the market. Its silencers go onto the entire range of gensets rated from 25–2,000 kVA from market leader Cummins and Ashok Leyland, and about half of those from Kirloskar Oil Engines. Most silencers for this application come from local fabricators.

Till last month an equal joint venture between Cummins Filtration of the US and Cummins India Ltd, CEIL is now transitioning into an entity that will be 100 percent owned by Cummins Emission Solutions (CES), another division of Cummins Inc’s components business unit, ahead of the advent of Euro 4 emissions legislation in India in April 2010. This is in line with a global realignment of Cummins’ exhaust products business, which has been moved from under Cummins Filtration into CES.

According to CEIL director and CES country manager Manoj Solanki, the new entity will be set up by October as a subsidiary of Cummins Technologies India Ltd, a holding company for all 100 percent ventures in India by Cummins Inc global businesses. While the name has yet to be decided, CES has already taken over management control, he tells Autocar Professional. CES is the market leader in emission solutions for medium- and heavy-duty on-highway truck manufacturers for the Euro 4 & 5 and EPA 2007 markets worldwide, ahead of such big names as Emcon, Tenneco, Cornaglia, and Eberspächer. It supplies selective catalytic reduction (SCR) systems to Volvo and Avia for Euro 4, and is preparing to supply DAF for Euro 5, Solanki says. From 3,000–3,500 acoustic mufflers a month at BS2 for Ashok Leyland, Asia MotorWorks, and Tata Motors’ 4923 tractor, Solanki projects that CEIL’s automotive muffler volumes will “go through the roof” once the market for BS3 products picks up April 2010 onwards. More specifically, a CES presentation he gave this correspondent projects volumes in excess of 200,000 units a year of “emissionised” or catalytic exhaust products by 2015, when BS5 is expected to become the uniform norm countrywide.

CEIL supplied the stainless steel mufflers for the 230 hp Cummins B Gas International engine that powers the Tata Marcopolo BS2 low-entry buses on Delhi’s roads, and last month began producing oxidation catalysts (oxicats) for the same engine that will power 3,125 low-entry city buses from both Tata Motors and Ashok Leyland that go into production this month for the Delhi Transport Corporation.

While Solanki doesn’t have an estimate yet for the volumes for Tata Motors and Ashok Leyland in the years ahead, he says initial deliveries of 30–60 a month for the World Truck, for which CEIL is the exclusive supplier, could rapidly grow to “10,000 next year or even 20,000”. There will be up to six configurations, including a vertical model for tippers. CEIL has a 50 percent share of business with Leyland, and he is hopeful of getting 100 percent of the latter’s Future Vehicle Development Programme.

CEIL sees good prospects in natural gas oxicats, as the CNG distribution network in the country extends to 46 cities by next year. (These were in fact Cummins Filtration’s first commercial emissions product 20 years ago in 1989.) “Strictly speaking, oxicats are not emissions products yet, because we are still talking about BS3. With the CNG infrastructure improving, wherever there are CNG Euro 3 buses till 2014, there’s an opportunity. Only with BS4 do we get into the ‘emissions’ business,” he clarifies.

The company has also made its first inroads into the off-highway sector. “We are currently in the prototype stage with JCB in Ballabgarh for their export requirements, and with L&T and Telcon. In 18 months we’ll be a significant player as the infrastructure boom happens,” Solanki says.

“At a macro level, the way I’m looking at this business shaping up is, we will continue to be leaders in powergen, leaders in on-highway commercial trucks, and with a significant presence in off-highway. We are working on increasing exports to 30 percent, to the US and UK. And finally, the oxicat business. These five things will define the growth of CEIL over the next 3–4 years, because all these businesses are going to grow.”

Solanki is confident that these together will help the company achieve his ambitious target of Rs 1,000 crore “or $25 million” by 2012–13, from Rs 40 crore levels this year. Powergen is CEIL’s largest market segment, accounting for 50 percent of its revenues, followed by industrial at 20 percent, but Solanki expects automotive to grow from 14 percent to 25 percent at the former’s expense.

To grow its exports, presently at 20 percent, CEIL plans to make full capital of its strength as a low-cost manufacturer and supplier of silencers and parts for powergen to the UK, Australia, and Singapore. There’s also the occasional off-highway product, like a tractor exhaust for J.I. Case, or now a “small off-highway project” for John Deere in the US. “Cummins Global Exhaust is a $100 million business within CES, and we are on the global export team. If I look at bringing even 10 percent of that here, that’s another $10 million,” he declares.

Flexible manufacturing

CEIL has a bank of more than 4,000 designs, and more than 500 part numbers (including tube products) in production at any time. Last June it reached its highest production volume of 15,000 silencers a month. The plant in Daman is set up on lean principles to accommodate production for on- and off-highway and industrial applications.

“Our manufacturing is flexible and we can produce 10 a month to 10,000 a month,” Solanki says. “High-volume manufacturers like Emcon and Tenneco have product lines, and if I have to compete against their products I may not be competitive because they turn out a silencer every minute. I don’t have a line, but I can get you the same product.”

Of course it helps that none of these presently competes with CEIL in truck exhaust mufflers, although Solanki sees them emerging as competitors for emission systems with the introduction of BS4. In any case, as the volumes for automotive rise, the company is working at reducing its cycle time for these products from three minutes to one, which would allow it to expand without the necessity of a third shift. Over the next couple of months it is also going to move into a bigger facility not far away from its present site.

One “weakness” cited in CEIL’s own SWOT analysis is its lack of vertical integration. For example, tubes and press components are bought in and aluminised and stainless tubes imported. This could be a disadvantage in the emissions scenario, especially with the entry into the market of vertically integrated suppliers like Cornaglia.

Then there’s the fact that CEIL is situated at a considerable distance from all the OEMs’ factories bar one. “We will have to change our strategy. With the introduction of the World Truck we will have to set up warehouses close to our customers, as we are doing in Chennai for Ashok Leyland, maybe some bending and other small-scale satellite operations with minimum overheads,” he says.

For the last three years the company has had its own engineering design team that is supported by Cummins Research & Technology India (CRTI) in Pune with structural and computational fluid dynamics analyses. “We do the designs and CRTI validates them for thermal durability, noise attenuation, etc,” Solanki explains. Automotive mufflers are typically tested and certified onsite at OEM locations, but CES acoustic and vibration analysis facilities in the US are also used for durability tests for some applications. “Some mufflers for Tata Motors are presently in test labs in the US undergoing durability testing,” he says.

Of the OE market for silencers totalling Rs 500 crore for all applications, commercial vehicles account for roughly a third. “Nobody really knows how big the replacement market is, because this is mostly a garage operation, where the muffler is cut open, soaked in kerosene, set on fire and then hammered to remove the soot, and stitched up again,” Solanki says.

Even so, he sees no immediate prospect for an aftermarket play because Tata and Ashok Leyland, being self-service OEMs, will buy and distribute CEIL’s products through their own channels. In any case, he says, there has been no warranty issues reported back to the company. “Our development process is extremely robust, whether it is inside the design office or at validation or testing. After that, our manufacturing practices are totally consistent, because everything comes out of a purpose-designed fixture, so there is no variation.”

Into the emissions era

Emission regulations do not impact the “exhaust” business for the next five years at least (see box on Page 53). Beyond that, the acoustic muffler will be superseded by a highly engineered aftertreatment system that includes one or more emissions reduction technologies, like regenerating particulate filters or SCR. And the scope of supply too will evolve to include everything from the turbo-out to the tailpipe, down to the clamps and fasteners.

Wearing his CES hat, Solanki is already at work on a system comprising an oxicat plus partial-flow filter as part of an EGR solution that CES is developing for, and will exclusively supply to, one major OEM. This system will possibly be the first in India to use Emitec’s unique PM Metalit substrate technology used in Europe exclusively by MAN Nutzfahrzeuge.

And following the decision at end-March by an interministerial group to approve the use of AUS32 (aqueous urea solution, known as AdBlue in Europe or Diesel Emission Fluid or DEF in the US) for automotive emissions reduction, there is movement finally happening on the SCR front too. Solanki says eight prototype SCR systems are being air-freighted in for Tata Motors and should be installed on test vehicles with Cummins engines by the first week of June.

Combining a CES system with a Cummins engine, as for Tata Motors, allows Cummins to tune the entire system and the SCR aftertreatment will be controlled by the engine ECU. For a non-Cummins engine the strategy is to have a separate “DCU” or dosing control unit, which controls the amount of fluid sprayed into the exhaust stream upstream of the SCR catalyst.

“To begin with, we will import the SCR systems from China, where we started producing them only last month. And the EGR parts – oxicat + partial-flow filter – we’ll make in-house. However, if the industry takes a U-turn and we see the volumes for SCR going up suddenly, we may advance our plans to set up manufacturing here,” he announces. Those plans envisage a new facility at Cummins’ megasite at Phaltan near Pune, Solanki reveals.

Since DEF is highly corrosive, special stainless steels will have to be used (see box above), requiring a change in the welding technology. “That’s where manufacturing becomes sophisticated. No more can it be treated as exhaust manufacturing,” he says.

“We will have more of robotic welding, because you don’t want any path for the urea to escape. Today we just bend the steel sheet so the edges overlap and stitching them to make the outer body (for mufflers). What CES products require is butt welding, so that when I insert the cylindrical substrate brick, there is not even the slightest gap for the urea to pass — because it has the ability to eat steel like cheese,” he explains.