Tenneco consolidates, gears up for growth

Tier 1 component supplier, Tenneco Automotive India has laid down a clear strategy for the mid- and long- term to not only sustain its handsome growth (30-40 percent) of the past three to four years but to also bank upon some new avenues which are likely to open up shortly. The Rs 800-1000 crore company has two verticals – clean air (emission systems and related products) and ride performance (suspension systems) with core business coming from the passenger car and commercial vehicle segments.

According to Pankaj Kapoor, deputy managing director, Tenneco Automotive India, the ride performance vertical contributes up to 65 percent of overall business in India while the clean air vertical (which contributes the remaining share) is yet to pick up in full swing. While complete exhaust systems and catalytic converters are the largest selling products for Tenneco’s clean air vertical in India, the ride performance portfolio comprises of basic suspension systems for cars.



LEADER IN CAR SUSPENSIONS

Kapoor told Autocar Professional that “we estimate that we are the largest player in the passenger car market right now when it comes to supplying the suspension systems to the OEMs.”

Some major OEMs to which Tenneco supplies suspension systems are Maruti Suzuki (M800, Eco, Ritz, Swift, Dzire and Ertiga), Ford India (Figo, Classic, EcoSport and others), Renault-Nissan (Micra/Pulse, Sunny/Scala, Duster/Terrano), Mahindra & Mahindra (Scorpio, Xylo, Reva and other models), General Motors (Sail, Enjoy, Spark and others), Toyota Kirloskar (Etios, Liva), Tata Motors (Indica, Indigo) and other prominent names.

“Going forward, we have a good number of projects in hand for the upcoming models and platforms, which will help us sustain our growth in 2014,” adds Kapoor.

Under this vertical, the company is also present in the aftermarket space where it sells shock absorbers for cars (accounts for nearly 95 percent of the overall aftermarket business) and two-wheelers (barely five percent). Elaborating on this space, Kapoor tells us that “we are one of the top two players in the aftermarket space for suspension units for cars; and our growth rate has been over 20 percent in the last two years.”

Tenneco’s priorities are to sustain its leadership position in this vertical and to enhance its product portfolio in the aftermarket, restructure its network at the dealership/retailer level and devise and offer new services for end customers to fuel further growth in aftermarket. Commercial vehicles are another area wherein the company is keen to consolidate its position under the ride performance portfolio.



THE BUSINESS OF EMISSIONS

It is well known that while vehicle emission norms in India are not at par with those in developed economies such as Europe and the US, the market in India stands to evolve as stricter emission norms are anticipated in the near- and mid-term. Tenneco is gearing up for the change as it fits in well, given that it is equipped and capable of producing and supplying advanced technologies to OEMs to help adhere to improved norms.

Kapoor explains that “thanks to our current legislations, the SCR (selective catalyst reduction) systems are yet to pick up in India, which is required for stricter emission environment.” While an EGR (exhaust gas recirculation) system aims to reduce particulate matter from the vehicle, an SCR system targets NOx emissions.

Interestingly, the emissions of particulate matter and NOx gases are inversely proportional to each other, which means that usually when a vehicle is emitting lesser particulate matter, it is likely that it would emit more NOx gases. For example, to fit an EGR kit on a vehicle, the engine is tuned to emit low NOx for higher emission of particulate matter, which is then controlled through the diesel particulate filter (DPF) unit.

These DPFs are what Tenneco currently supplies to OEMs, particularly the SUV manufacturers (such as Mahindra & Mahindra) and others for the domestic as well as export markets. These units, along with the entire exhaust system, are designed and developed customised as per OEM requirements.

However, Kapoor is highly enthusiastic about the demand for SCR systems in India in the coming times.

“SCRs will play a bigger role in India in the time to come and that would be more effective solution to control vehicular emissions. Under the current legislation, vehicles do not need SCR systems as the prevailing technology manages to adhere to the norms. Nevertheless, the implementation of SCR systems is inevitable in the longer run,” he adds. He strongly supports the one country-one fuel policy model as against the currently prevailing dual-fuel policy in India as he believes that such a model would not only bring uniformity in the implementation of technology across the country but also contribute to the environment more substantially.

He says that “we recommend a one-country, one-fuel policy model and aggressive emission norms in India as that would help in terms of a wider acceptance of SCRs and DPFs locally. If the government is ready to support with updated legislations, the industry would grow. Major players have been working on these advanced and much- needed technologies for over the past two years.”

Meanwhile, Tenneco’s clean air engineering team is busy in developing an SCR system for an undisclosed OEM for application in the domestic market; this is expected to be ready by 2015.

Commercial vehicles, in this regard, are another hugely lucrative opportunity and company officials are diligently following the space. “Though we are awaiting better legislative requirements, we are focussing on the CV segment where the content (aggregates) in these systems (as compared to cars) is much higher, thereby driving the sales and profitability. Meanwhile, light vehicles (SUVs and cars) will be driven through volumes. We also plan to supply complete exhaust systems to the luxury sedans going forward,” says an optimistic Kapoor.

The company already supplies exhaust systems to Nissan Motor India (Micra, Sunny, Evalia) and catalytic converters to Volkswagen India (Polo, Fabia, Vento, Rapid), Tata Motors (Indigo, Indica, Sumo, Xenon), M&M (Xylo, Scorpio, Maximo, Bolero and other models), GM India (Tavera, Optra, UVA, Spark) and others.



ENGINEERING CAPABILITIES

With five manufacturing plants in India, Tenneco is now located in all important automotive belts in the country. The company has recently begun operations at its largest plant, which came up at Chakan, near Pune, in 2013. This plant manufactures emission- related products and also houses ride control modular assembly for suspension systems. The Chennai plant is also similar to the Chakan facility, where the company manufactures emission as well as ride performance products.

On the other hand, the Hosur plant is the largest for manufacturing shock absorbers and Tenneco has recently also set up a facility for high-speed chrome plating of piston rods at the location.

“The new engineering centre at Hosur is capable of designing, developing and validating products locally in India and we are completely independent of any assistance from our global teams. In the last three to four years, we have opened three new greenfield facilities (Chakan, Chennai and Bawal) and have updated the Hosur plant,” signs off Kapoor.