Faurecia eyes chunk of India’s emission control technologies market by 2017

As India gradually moves towards improved automotive emission norms, a host of companies from developed countries are eyeing good business opportunities in the country. Faurecia, the world's sixth-largest automotive equipment supplier, is taking concrete steps to stay ahead of the curve. The company, which opened its new plant at Bidadi, near Bangalore, on December 7, 2012, to cater to the captive requirements of Toyota Kirloskar Motor, is in the process of opening another greenfield facility in Chennai later this year.

Faurecia specialises in the design and manufacture of automotive equipment through its four key business groups: Automotive Seating, Emissions Control Technologies (ECT), Interior Systems and Exteriors. Under the ECT division, it has four plants in India, two in Chennai and one each in Bangalore and Pune. Faurecia is the single-source supplier of emission control products for all Toyota models manufactured in India. Talking to Autocar Professional, Mahendra Killedar, country general manager of Faurecia Emissions Control Technologies (FECT), says: “The company has been supplying emission control products to Toyota’s Indian plant from its Kumbalgodu facility near Bangalore since 2004.”

As Toyota gears up to increase its vehicle production volumes, Faurecia has set up the new facility closer to TKM’s manufacturing operations to match the increased demand and also provide just-in-time supplies. “Our expansion is basically synchronised with the expansion of Toyota which is adding capacity in its Plant 1 and 2. So we wanted to make sure that we are right in time.”

Faurecia supplies cold end, hot end and Integrated Panel Reinforcement Tube (IPRT) products to all the models manufactured by Toyota in India. The company supplied 2,15,000 car sets (cold end, hot end and IPRTs) to TKM in 2012. TKM rolls out the Innova and Fortuner from Plant 1 while the Etios, Liva and Corolla are manufactured at Plant 2.

Faurecia is ready to supply around 300,000 units this year to TKM from its new Bidadi plant, which has an installed capacity to manufacture the same number of units per annum, Killedar says. Operations at the older plant in Kumbalgodu have been closed. Of the total five-acre plot in Bidadi, the company is currently using 7,000 square metres for the new plant and reserved another 3,000 metres for future expansion.

Big supplier to Toyota

While cold and hot ends are part of the emission control system fitted under the vehicle, the dashboard on Toyota vehicles is built around the IPRT. The Bangalore unit is the only plant producing IPRT, claims Killedar. “IPRT is not connected to the emission control system but still Toyota asked us to manufacture it as we have the capability in that segment,” he adds. The exhaust and IPRT systems that Faurecia makes are are manufactured to Toyota specifications. While the cold and hot ends are made using stainless steel with TIG or MIG welding technology, the low carbon steel has been used to produce IPRT mostly with spot welding. Overall, the plant manufactures 31 varieties of parts to bring out these three major products for Toyota vehicles. These systems are supplied to all locally manufactured Toyota models in India like the Innova (both BS III and IV versions), Fortuner, Etios and the Liva. The hot ends are part of the exhaust system fitted near the engine and are manufactured with the technology engineered by Toyota to filter the maximum amount of polluting carbon dioxide.

The IPRT provides the mounting facility for the clutch plate, brake, accelerator, steering, audio and air-conditioner and other dashboard-related fittings. The IPRTs are also supplied with or without airbag option for Toyota vehicles.

Opportunities ahead

“The tightening of norms by the Union government to check carbon emission has been pushing up demand for quality emission control systems in India,” says Killedar. He claims that Faurecia is the world leader in emissions control technologies for every sector of the automotive industry, from passenger cars to commercial vehicles. One in four vehicles worldwide now has a Faurecia exhaust system, he adds. Furthermore, he sates that it is the only manufacturer in India for spun-type mufflers and catalytic converters.

In India, other than TKM, it also supplies its emission control products – both cold and hot ends together or separately – to OEMs like Ford India, General Motors India, Fiat, Tata Motors, Hyundai Motor India, and Renault-Nissan. The company is currently in talks with three other carmakers in India for its cold and hot end products, which could be supplied from Faurecia’s existing plants. Killedar however refuses to name these potential customers.

South India and Chennai in particular are going to be growth areas for Faurecia. From two of its Chennai facilities in Maraiamalainagar and Vallam, it supplies emission control products to Ford, Hyundai and Renault-Nissan. As the orders from these OEMs have risen, Faurecia is now going about setting up a massive new production facility covering 16,000 square metres in Pondhur near Chennai. The new plant, which is expected to commence operations in the second half of 2013, will consolidate both the existing facilities in Chennai, says Killedar.

With growing demand for its products, the company has chalked out a plan to increase its market share in India dramatically in the near future. The estimated Indian emission control technologies market stands at Rs 2,250 crore, of which Faurecia has a share of 12 percent. It aims to increase this to 29 percent by 2017. It also aims to drive up its revenue to Rs 1,000 crore per annum from the current Rs 260 crore, he elaborates.

This growth strategy all involves increase the workforce at all four FECT plants from the existing 700 to 1,700 by 2017. Apart from manufacturing operations, FECT also has a Research and Development centre in Bangalore, housed with 150 staff, cater to Faurecia’s global R&D operations. The joint venture between Faurecia and Anand Group runs all manufacturing units operated by FECT in India. While Faurecia holds 74 percent, the remaining 26 percent share owned by Anand Group. However FECT’s R&D division is 100 percent owned by Faurecia. FECT has as many as 75 component suppliers across the country.

Targetting new business in HCVs

Faurecia is also eying business from the heavy commercial vehicle (HCV) segment on the back of its alliance with Cummins, a global leader in diesel engines for commercial vehicles. Giving a fillip is the Union government’s mandatory decision for 13 metro cities to meet Bharat Stage IV emission norms.

The company has set up a separate assembly line at its existing Pune plant to manufacture Selective Catalytic Reduction (SCR) system for HCVs along with cold and hot ends for passenger vehicles. These SCRs are suitable for trucks and buses to meet BS IV norms.

As part of its global alliance with Cummins, Killedar says the company manufactures and supplies SCRs as required by Cummins, which in turn will cater to needs of its HCV customers in India. “We started producing SCRs since October 2012. We believe that Cummins might take around 2,000 units of SCRs from our Pune plant this year,” he adds. “When the Centre makes BS IV norms uniform across the country, the company expects to get higher business in the HCV segment in the coming years,” remarks Killedar.

The Pune plant has an installed capacity to manufacture 30,000 units of SCRs per annum. To accommodate the SCR assembly line, FECT expanded the Pune plant to 3,000 square metres from 2,000 square metres in 2012. This is also the sole facility where FECT started manufacturing SCRs for HCVs in addition to hot end and cold ends for passenger vehicles.

Given the strategic growth plan that Faurecia is working on in India and the concrete steps that it is taking, the company’s target of more than doubling its existing 12 percent market share by 2017 seems achievable. What seems sure is that the coming years will see the emission control technologies' turf in India also attracting other majors from overseas, all eager to make the most of a burgeoning market for their products at a time when growth in Europe is dwindling.