A K TANEJA.
The CEO and MD of Shriram Pistons speaks to Murrali Thalor about the company's growth drivers, global sourcing opportunities and on expanding its product portfolio.
What has been the biggest growth driver for Shriram Pistons since inception?
The end goal of business is profitable growth. And the best way to achieve this is by being customer focused. With this vision, Shriram Pistons and Rings (SPR) has been growing in step with demand growth from OEMs, export customers and the aftermarket. Volume growth at SPR in the past five years has been ahead of competition, resulting in an increase in market share for all our products.Ten years ago exports were made an integral part of our business strategy, for both accelerated growth and technology improvement. Exports now constitute about 20 percent of turnover. Working with global customers has helped create a ‘first time right, always right’ quality culture across the organisation. We are continuously adjusting our portfolio to have a balanced representation in all segments of the market. We are also consciousof the need for balanced growth between supplies to OEMs, aftermarket and exports.This has not only proved to be a good de-risking strategy, but also enabled the company to tide over volatility of cyclical OEM business, as in the case of heavy CVs last year.However, outsourcing from best-cost countries will continue to some extent. In my view, the emphasis will shift to components that are not technology-critical, or not likely to see disruptive technology changes in the near future. Our strategy is to work closely with our collaborators to offer a combination of world-class technology and quality, at Indian cost. Therefore, we see continued growth in exports, albeit this may come with some hiccups in the near future.
How do you see the Indian automotive industry transforming itself with recent global alliances? What do you think are the opportunities and threats?
In recent years, we have seen many global alliances including Volkswagen-Suzuki. Despite having its own logic, every alliance has some common underlying factors, including efficient utilisation of design and development costs by commonising aggregates and platforms, leveraging each other’s distribution network, and acquiring a footprint in new markets that promise growth. However, from our company’s point of view, we see this as a great opportunity. We are a key supplier to Maruti Suzuki for several years now and hope that our excellent track record will give us a head start to supply to Volkswagen, whenever it decides to make engines in India. Also, our technology partner for pistons – Kolbenschmidt of Germany – has a longstanding relationship with Volkswagen. This will allow us to start on a strong and sure footing with Volkswagen India for any business opportunity in the future.
What is Shriram Pistons' strategy to tackle the changing business environment?
We are tracking all significant developments in the auto market in India and abroad carefully. The market is growing, but the technology requirements are also changing. With the help of our partners – Kolbenschmidt of Germany and Riken, Fuji Oozx and Honda Foundry of Japan, we hope to remain ahead in the race to acquire new business in India. Also, we are continuously investing in new technology and manufacturing processes, modern plants and equipment, in-house talent and people development practices, and building strong, reliable customer relationships.
To remain competitive, many global OEMs are looking at Asia to source components. Do you see an opportunity?
In view of the changing landscape, global sourcing from cost-competitive countries may go through some tweaking and rethink. With declining volumes in USA and Europe, OEMs would like to support their key component manufacturers to stay in good health, because these manufacturers are a vital source of new technologies and innovations that significantly contribute to new product development. Outsourcing more from China and India could weaken the supply base further, choking new technology development.
Do you have capacity in place to cater to the increasing demand?
We are currently manufacturing approximately 1.2 million pistons, two million engine valves and over five million piston rings per month. To meet the demand in India and for exports, we are setting up an integrated greenfield project in Pathredi in Rajasthan. The initial investment is about Rs 200 crore and commercial production will start in early 2011. Eventually, this plant will be similar in size to our existing plant, although the product mix will be different.
Are you looking at expanding your product portfolio?
We have a huge reservoir of knowledge and skill sets in aluminium and grey iron casting, upset and extrusion forging, high precision machining, several types of surface treatments, including physical vapour deposition, ceramic chrome plating and hard anodising. If any of our OEMs would like us to develop new products, where our management and technical know-how can be leveraged, we will be expanding our product portfolio.
To whom do you supply to in India and how much do exports contribute to the turnover?
We supply to practically all OEMs in India and in many cases as a single-source or preferred supplier. We also cater to global OEMs including Honda, Ford, Renault, Iveco, Kia, and Wabco, meeting Euro-4 and Euro-5 norms. Exports, that contribute about 20 percent of our Rs 700-plus crore turnover, have enabled the company to implement world-class manufacturing and quality practices and introduce the latest technology ahead of time. We are well positioned to benefit from the changing landscape in the automotive industry, in India and globally. n
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