The Director of the Amalgamations Group and also Chairman and Managing Director of India Pistons, which manufacture an expansive range of products for internal combustion engines, tells Kiran Bajad how it is readying for the industry shift to electric mobility even as it collaborates with OEMs to produce BS VI components, develop Tier 2 components with Tier 1 engineering expertise, and why India's ramp up towards e-mobility should be gradual by going hybrid first.
There is considerable government policy movement on the mobility roadmap of India. What is your viewpoint?
NITI Aayog has already come out with a policy statement that says all two-wheelers less than 150cc will have to be electric by 2024. The industry has got some view on this but we believe this is a reality and it will happen.
In the future, above 150cc two-wheelers will also be electric sooner rather than later. A similar transition may also take place in the passenger vehicle and commercial vehicle segments.
However, worldwide today, the penetration of EVs, even in developed countries, is less than one percent compared to IC-engined vehicles. The government has set a target of 30 percent by 2030; we believe it will be near-about 10 percent by then as the infrastructure and other investments needed to drive this will take time.
The government’s concern is emission reduction, both NoX and CO2 but there is a future for IC engines beyond 2030, subject to stricter emission norms.
The Amalgamations Group has many companies primarily catering to the automotive sector and IC engines in particular. How is the group preparing for the era of electric vehicles?
We are working towards EVs aggressively and a group of 8-10 engineers has been set up recently to look into all areas of EVs. This team is speeding up the work, and we are looking at global manufacturers in various markets including the USA, the UK and China. We have already identified a few things but it’s too early to talk about them at this stage as the initial discussions are currently underway, mostly on the electric drive and transmission.
There are primarily three focus areas — firstly the concept to launch; raw material to delivery, and finally order to cash. Raw material to delivery and order to cash are proven; moving from concept to launch is where we have the ingredients ready for EVs. For example, we have the best expertise in electric motor housing of aluminium die-casting and similarly with the motor shaft forging. All we need to do is bring in the technology through collaboration but for Indian operating conditions.
We have to ride two horses at the same time — firstly, to make our existing business sharper, reliable and in tune with the new world. Secondly, explore opportunities in EVs and the team will look at both these areas. For example, we are working on an assembled crankshaft that is one step better than the current crankshafts used in engines in India.
We are setting up a business that will help OEMs in India to make existing engines more efficient. In the BS VI era, the after-treatment of vehicles will gain a lot of importance and we are putting efforts in this area to identify the areas wherein we can play a role. Therefore, we are looking at not only making our product more efficient today but also eyeing opportunities in new mobility areas.
Can you elaborate on the Group's BS VI-related work since it manufactures several components for engines? And what were the challenges involved in meeting this stringent emission standard?
As regards our pistons and rings for engines, there are two aspects to the design and manufacturing of these parts. In the design aspect, we expect the pressure in the combustion to go up substantially; for this, we need to go in for high-strength alloys and, maybe in extreme cases, steel. We are at an advanced stage of developing these products, in fact, have already given samples to OEMs.
It may also require internal cooling of the piston, sophisticated technology for some kind of cavity inside the piston, and also surface coating of the piston, one which will not peel off under any circumstance. Likewise, for piston rings too. We are working with our Japanese JV partner on both the steel technology as well as the sophisticated coating required. We have already received approvals from key OEMs such as Volkswagen India, Ford India and others.
The challenge is how to make these products in the present manufacturing setup without compromising quality. A significant change is required in quality control systems as we can’t afford any failure. The focus is on utmost cleanliness inside the factory along with reliable, robust systems and good industrial and HR practices, which interlink both people and technologies. We are setting up clean rooms and conducting ultrasonic clinics, while also working on the entire factory environment to avoid producing dirty components.
You have a number of component companies working independently on products and technologies. Are you looking to leverage the Group's capabilities with a combined R&D set-up?
The first target is to identify common goals between the various group companies as there are a lot of synergies, given that they work quite closely with each other to offer a combined solution to customers. We use common testing facilities to make sure the customer gets the best solution.
The piston and rings companies already work together but we are now attempting to bring all the other companies together, so at least the engine testing and validation can become a common feature.
What are the R&D capabilities at the Group level?
We have enough people working in the R&D area of the Amalgamations Group. Apart from R&D, the focus is also on quality control to ensure robustness across various processes and good employee practices, which is common between all the companies.
We have an Amalgamations Group manufacturing systems and quality systems standard, just like Toyota has, across the group.
What are the new technologies that you have recently introduced, or plan to introduce soon for OEMs in India?
Lightweight and low friction pistons and rings. We are also working closely with OEMs as regards emission reduction at source to reduce their burden on after-treatment. We are working closely with one of top Indian OEMs to introduce an assembled camshaft which provides significant friction reduction and lightweighting.
Which are the top three technology buckets for the Group?
Lightweighting, efficiency improvement and electric mobility competency developments. Also, we are creating Tier 2 components with Tier 1 engineering ability. This is the need of the hour as one place cannot create the required competency. This would be equal to the Japanese model.
The Amalgamations Group has been a formidable player in the Indian automotive industry since eight decades. How do you plan to transform it to grow in the fast-changing disruptive auto industry?
We have been planning and executing our transformation by internal talent accumulation and bringing in external talent for the technologies and competencies needed to face disruptions. For example, we have categorised our efforts into ICE and electric mobility. With respect to ICE, we are working on lightweighting (pistons for petrol engines, assembled camshafts for passengers cars, two-wheelers and heavy duty engines ), and efficiency improvements (gallery cooled pistons, new tech rings). As regards emissions, we have started working with global players to address the CAFE II requirements and for off-highway vehicles.
You already have an automotive battery business (Amco). Do you plan to expand into batteries for EVs?
If we look at the overall growth of EVs, there are three things and one of them is the battery. The battery itself has two parts — cell manufacturing and the basic chemistry of lithium. This can be addressed only with huge investments and there are already big companies that have made big bets on the same. It’s too late for us to get into that.
The second aspect is taking advantage of this. Basically, you need a player who can put everything together in a box, suitable for any application, engineer the battery management system, and then you can readily apply into an electric vehicle.
This is a space where it is possible for us to play a role and we are looking at this opportunity — being a player in the EV battery area but not necessarily in cell making.
The Group has collaborations with global companies. Are you looking at any more to tap the megatrends of autonomous driving and connected vehicles?
We are actively involved in bringing high efficiency e-drives to India, which could help to handle cost pressures on battery packs/modules. We have done some initial work on after-treatment systems, but this needs to be confirmed with market requirements before we do full-scale investments. We do not have any plans as of now for IoT and autonomous driving but, if needed, our management team is capable of looking at them at the right time
How is the Group's level of engagement in the export market?
We do export today but it mostly consists of semi-finished products. For example, for bimetal bearings, we are exporting a lot of powder which is ultimately used by the bearing manufacturer in the overseas markets. We are a Tier 2 supplier in these products but we view the opportunity as big in terms of large volumes. We also export pistons largely to the independent aftermarket, and not to OEMs directly. We see scope in aftermarket exports with a lot of niche products, which have lower volumes but the value is considerably higher. For example, steel pistons for construction equipment and large engines for ships.
We are also developing pistons for GE for non-automotive application for their gas engines for power stations. The pistons are quite big but it is a specalised technology, and we have a role to play.
Being a diversified group, what are the major challenges that you foresee and how do you plan to overcome them?
I would say scale of operations is the biggest challenge. Scale is extremely important because of the type of investments we have to make in the areas of vision systems, automation, and more R&D in computer simulation packages. This calls for a lot of capex and this investment can be justified only if the scale is available. Now do we wait for the scale to come first and then invest, or do we invest with the hope that the scale will follow?
It is a calculated decision that we have to take and involves a small element of risk if the capacities stay idle. But I’m confident about that if we do the investment at the right time, with the right equipment, not only in technologies but also in people. I have earlier touched upon the importance of employee participation in every aspect including quality, manufacturing and R&D. This is a big challenge for the Group.
We keep a close interaction with our OEM customers to give them the confidence that we are committed to their growth, with the right type of investments at the appropriate time. It's all about giving them confidence and making them work along with us.
Apart from this, we need a clear policy roadmap from the government for electric mobility. It would be far better for India where we may not have some of the key technologies (for EVs) or enough investment in the infrastructure nor a platform which can be developed immediately for EVs. Therefore, the approach should be one step at a time.
When the economy mostly depends on IC engine-driven vehicles, India going hybrid will be the first right step for a certain period. We should ramp up towards EVs gradually as technology matures along the way, so that we don’t end up making erroneous decisions. This will help minimise disruption to the current eco-system and absorb the new ways and technologies over a period of time.
How do you view the growth of the automotive industry in India over the short- to medium-term?
The present downturn in the auto sector is purely an aberration, maybe this is the reaction to a number of things that have happened in the market. There are some structural changes taking place, there is a growing percentage of youngsters who don't want to own a car, which has a negative impact on sales. But generally speaking, India is a country with a growing working population and people do want to own a car. I think this overall uncertainty may remain in the market until April 2020, resulting in FY2020 being a difficult year for the sector.
Overall, as the government stabilises, the infrastructure spends will start to take off and, as the economy picks up, the market will grow. In the long term, India remains a growth market for the automotive sector.