2012 South India Special: India Pistons gets Honda diesel mandate

India Pistons is working on Honda’s new diesel engine platform for India. The Japanese carmaker hopes to have its engine ready in the first quarter of calendar 2013 which will enable it to launch diesel variants of its cars in India. Honda Siel Cars has seen its sales in the country limited by the fact that it lacks diesel technology. For India Pistons, the Honda project is one of many that it is working on currently in the four-wheeler space.

In an exclusive interview to Autocar Professional, Ram Venkataramani, director, India Pistons, says: “We are getting significant breakthroughs for projects that involve new engine platforms.” In recent years, companies like Volvo-Eicher, Mahindra-Navistar and Daimler India Commercial Vehicles have set up shop in India. The products that they have rolled out or intend to represent some of the most modern engine platforms in India. The raison d’etre of these new platforms is emissions legislation, both current and future.” Towards this end, India Pistons, which caters largely to the medium and heavy CV segment, has made key investments which it says are necessary as these new engine platforms come to India.

For India Pistons and its group companies, IP Rings and Mahle IPL, its joint venture with Mahle, this is a key business opportunity. Pistons and piston rings are at the heart of the internal combustion engine. All three companies have an estimated capex of Rs 250 crore which will be spread over a three-year period. However, in the current fiscal, India Pistons is adopting a cautious approach. Venkataramani attributes this to a host of factors such as interest rate fluctuations, inflation rates and government deficit, all of which have contributed to a slowing on business.

For India Pistons, the dip in M&HCVs (according to SIAM, growth in this sector has fallen by 13 percent in June 2012) is significant. There has also been an impact on the company’s business for tractors, off-highway vehicles, locomotives and stationary applications. “Value-wise, M&CVs are seeing the biggest dip,” explains Venkataramani.

While India Pistons has pruned its forecast for this year, saying it “will grow but not as aggressively as we started out,” in the medium to long term, the company is bullish for all sectors and is hopeful of a growth rate close to 35-38 percent. It will, therefore, make some more investments in 2013-14 for trucks and passenger diesel cars. Apart from Honda, the company is working with Toyota Kirloskar and Ford India, the latter for which it is working on an upgraded version of a diesel engine.

The key concern for the company as it embarks on new engine platforms – be they commercial vehicles or passenger cars – is the kind of volumes they will generate. However, the need to make these investments is absolutely imperative. There are a host of new technologies and in some cases, the investments are being made within the existing set-up. “We have to make them irrespective of our optimism or growth predictions,” Venkataramani adds. The capex plan will be funded through a combination of equity and internal resources. While equity will comprise Rs 65 crore, the rest will be generated internally.

On the surface

India Pistons is also making key investments in surface coatings. These coatings are a key part of processes associated with making engines meet Euro 6 norms. They include PVD, nano diamond coating and molychrome ceramic coatings, all of which will be required in the future.

The company has begun to supply some of these coatings domestically to OEs that are gearing up for Euro 4 compliance even as the use of older coatings tapers off. Another area of investment is precision forging which began in 2005 and by using homegrown technology. “The orbital cold forging gives us near-net shape for chassis and transmission parts for which demand is growing exponentially,” explains Venkataramani. The company is also looking at export opportunities. India Pistons’ processes enable it to make a variety of parts for chassis/transmission for both cars and trucks. In the aftermarket, India Pistions supplies both products that it makes as well as trades. It has made key changes in its distribution channels leveraging IT to make the process more efficient and streamlined. “We are empowering our sales force, making the entire operations paperless,” says Venkataramani. The other spin-offs include better inventory management and overall, efficient operations. The company employs 80-90 people who work in 24 sales outlets.

Thanks to its association with Mahle, India Pistons gets access to the latest technology for piston rings, the company can tap the expertise of its technology partner, NPR. Mahle is among the 50 largest auto component makers globally with about 80 manufacturing facilities. In India, it is present in three product lines: filters, camshafts and pistons.

However, India Pistons also has its own in-house R&D that has developed its own coating technologies for use in the future as emission norms change. Along with its overseas partners, India Pistons has developed local solutions that can be more cost effective and in many cases, are complementary to imported technologies.

India Pistons’ main facility is at Sembian, a 200-acre facility in north Chennai. But given its age and location, the company recently set up a facility at MM Nagar that caters to small CVs, two- and three-wheelers and stationary engines. The new location has also provided several advantages in logistics as well. Apart from the two plants in the Chennai area, India Pistons has small units at Pantnagar that cater to Ashok Leyland’s requirements; these are primarily satellite assembly units. In SCVs, the company is a 100 percent supplier for the Leyland Dost, Tata Ace and Mahindra Maxximo.

Meanwhile, the company is also exploring the potential of setting up a base in Gujarat, impressed by the state government’s approach to business and, more importantly, given the fact that the state has attracted major investments in recent years from the likes of Tata Motors, Ford, Peugeot and also Maruti Suzuki.

“ We are evaluating a unit there but over a three-year window as this would be a large operation,” reveals Venkataramani.



Eyeing two-wheelers

India Pistons’ exposure in the two-wheeler segment is limited as of now but it is an area that the company is looking at. “We are talking to the big players including Hero MotoCorp, Honda, Bajaj Auto, TVS and Suzuki and Yamaha to a lesser extent,” says Venkataramani. The company is confident that with its technology and processes, it can make some significant breakthroughs. Making an entry here is also part of the three-year plan.

South-side story

When asked what the challenges are of south India’s automotive cluster, Venkataramani says that while the south, and especially Tamil Nadu, have done well in attracting the big names even as homegrown companies have prospered, the main issue is availability of electricity. “We have a power shortage which the government is trying to resolve,” he says.

For energy-intensive industries like foundries this is of great concern. In fact, the company is mulling over shifting the foundry business to a place where power supplies are stable. If it does so, the decision will be based on a variety of other factors as well such as infrastructure availability and customer access. Other challenges include exhorbitant land prices and the non-availability of workers.

Talking about trends in the overall pistons business, Venkataramani alludes to a couple of important trends. Firstly, given that piston rings are the heart of the engine business, it is to that extent technologically demanding and needs investments. Secondly, emission norms drive the business and its future shape. Customers want better efficiency as they move from Euro 4 to Euro 5. As far as pistons go, it is emissions and lightweighting issues that come together.

BRIAN DE SOUZA