Behr looks to HCV market for growth

Behr India was named Cummins’ best supplier in 2008 for consistent zero ppm quality, plus excellence on the cost and delivery parameters, for its Visco fans that go onto the engine manufacturer’s automotive range in India. According to chief operating officer Sunil Kaul, it is now engaged in Visco fan development for all new products in the pipelines from the truck OEMs in the country.

In the face of dismal revenues from its existing passenger car programmes, and the delay in the launch of Tata’s Nano, for which it is the exclusive supplier of engine cooling and HVAC modules, Behr has decided to turn its attention to the commercial vehicle sector.

Kaul tells Autocar Professional that Behr “burnt its fingers” on programmes for Mahindra Renault’s Logan, Chevrolet’s Optra, Aveo, and UVA, and Tatas’s new Indica, having invested an average of Rs 5 crore to produce HVAC modules for each model, none of which has sold anything near the enthusiastic initial projections.

Cabin cooling for trucks is a segment that holds the most immediate promise, and Behr India has designed a unique modular HVAC that can be fitted with little or no modification into all existing and upcoming models from the two major Indian truck OEMs. Kaul projects that this business will be worth Rs 50 crore for Behr by 2012, a good third of the total market potential in that year.

That the Behr India designers rose to the task and came up with a design in only nine months is a matter of pride for Kaul — this had never been done in Behr before. “We’ve already delivered the first prototypes to the OEMs, one of which is already testing them on three vehicles. We are now in advanced discussions for supply contracts,” he reveals.

The company already produces an older design for MAN Force trucks on a line that was moved from its parent company in Germany, but these numbers are minuscule. Kaul does not think much of the prospects of business with VE Commercial Vehicles and Daimler either.

That’s because, while these European OEMs typically want custom-designed air-conditioning systems for each of their models, there’s no way Behr is going to invest Rs 5 crore per truck here considering the relatively low volumes in prospect — “and most definitely not in the prevailing market conditions,” he says.

The company is next preparing to enter the market for truck radiators, which Kaul sees picking up in a big way in 2011–12 with volumes of 100,000 for Behr alone and revenues projected at Rs 45 crore.

He says the company is developing HVAC and engine cooling modules for all the Indian OEMs’ new product generations, presumably including the Y1 from Tata and Ashok Leyland’s Unitruck.

In the mean time it has already started producing radiators for farm tractors, supplying 1,000 a month to Escorts for a 35 hp model, and is preparing to start supplying to Sonalika in two months.

By the end of 2010, the company will also have begun production of EGR coolers for BS4 engine applications, for which it is already engaged in seven projects at the moment with just one OEM. “They approached us when all the other suppliers’ products failed in tests,” Kaul says.

Behr is the worldwide market leader in EGR coolers with a share of over 21 percent, and Kaul is confident that EGR is a better choice for Indian OEMs from the cost and size perspective than the urea-based SCR. “It’s far more convenient,” he declares.

EGR coolers are, in fact, also going to be the largest of the three businesses by Behr estimates, with a potential of Rs 150 crore out of a total market of Rs 1,000 crore in 2012. At the moment Kaul is busy preparing a strategy for manufacturing in India. “Behr’s designs are very robust. Since the temperatures involved are very high, we will need high-grade stainless steels and a totally different manufacturing process from that used for radiators,” he elaborates.

Since BS4 takes effect in 13 cities next April, the components for the EGR coolers will be imported till Behr has installed its manufacturing capacity, including specialised equipment to laser-weld stainless steel, which will require an investment of Rs 65–70 crore, Kaul concludes.