Sandeep Khullar, the director and head (marketing and sales) of Oerlikon Drive Systems India on participating for the first time in ACMA Automechanika New Delhi, the company's performance in 2016 and the new focus areas including electric drive systems. An interview by Amit Panday.

Oerlikon has participated in ACMA Automechanika for the first time. What were your expectations from this platform?
We have participated in this event because we want to showcase our products and expertise specifically the electric drive systems. Oerlikon Drive Systems has, globally, set up a group with focus on opportunities in the aftermarket and services. Although there is not much business from India in this area, we are supporting this focused group with engineering and reverse engineering as well as manufacturing capabilities. 

How was CY2016 for Oerlikon in India in terms of revenues and new business generation? What kind of growth are you aiming for?
If we consider third party sales, we have grown by almost 23 percent in CY2016. This is inclusive of sales to Oerlikon Group companies too. The growth for Oerlikon Drive Systems India has been substantial. The main industries that we cater to in India are agriculture, construction, automotive specifically commercial vehicles and utility vehicles such as electric golf carts.

2016 was good in terms of new business acquisitions too, which I can estimate to be about 20-22 percent of our overall business. This business is going to mature over the next two-three years. This aligns well with the goals that we have set at Oerlikon Drive Systems India. Our goal is to double our revenues in the next five years, and this was set in CY2015. So by CY2019, we want to double our third party sales in India.

We are targeting 20 percent growth in our business in CY2017, which augurs well with our 2019 roadmap.

What is Oerlikon Drive Systems India’s turnover for CY2016?Although I won’t be able to disclose the exact number, it certainly is more than Rs 1,000 crore. Out of this, the third party sale is close to Rs 640 crore. The third party sales include domestic as well as export business. 

Although exports have a larger share in the India business, how is the domestic business shaping up?
If you see last year we have done well in both domestic as well as exports. However, in the domestic market, construction business did exceedingly well for us. That has garnered growth of more than 30 percent last year.

The other segment that did well was commercial vehicles. We supply products such as synchronisers, shifting solutions, gears and shafts for commercial vehicles.

In CY2016, while we acquired some new customers such as Ashok Leyland, we also grew our business within our existing customers.

This year the demand for farm equipment seems to be growing well and could see double-digit growth in the domestic market.

 Is capacity expansion in the pipeline? What is the current capacity utilisation in India?
We have three manufacturing facilities in India now – one in Greater Noida, one in Belgaum and the newest one has come up in Sanand (Gujarat). We started this facility (Sanand) by the end of 2014. We have acquired around 35 acres of land there and the current construction is on 15 percent of the land, which is the first phase.

The expansion under phase II is already complete. We have planned capacity expansion up till phase V over the next three years. This is expected to use about 40 percent of our land at that site.

We are expanding in a modular form, which depends on the requirements of our customers. In terms of capacity utilisation, currently we are following the optimal levels, which are around 85 percent of overall production capacity.

Oerlikon is aggressively focusing on the transmission systems and its associated parts for electric vehicles. Please elaborate.
We are making components for electric transmission systems in India but the complete drive system is not currently manufactured here. This is being done at our facility in Europe. We are making transmission systems for electric vehicle programs for European customers.

We are manufacturing some components for electric drive systems in Sanand, which is a large export business for us. However, more importantly, within the Oerlikon Group, we have the capability of developing, designing, validating and manufacturing complete transmission systems for electric cars. This is our core focus area going forward.

Did demonetisation impact Oerlikon’s domestic business?
Fortunately for us, it has not made any significant impact. However, at the same time, I would like to say that some of our customers got impacted. That was balanced for us, thanks to the good months of our export business.

Frankly, the impact of demonetisation failed to last long because, as I see, banks extended remarkable help to the customers. For example, in the construction equipment industry, the banks stretched the financing limits and the rate of down payment was reduced. Also, luckily, the impact was not on the segments we play in.

Going forward, I see market recovering very fast. The government’s thrust on rural markets and infrastructure sectors is good news for us. I foresee construction equipment would continue to do well in CY2017. Also, we have got good export orders, which will help us record desired growth numbers this year.

Does Oerlikon Drive Systems India has its own R&D setup? What is the overall headcount at Oerlikon in India?
Yes, we have a team of engineers who work on application engineering and new product development in India. We want to expand this group going forward. We are setting up a testing facility (at Sanand). That will help us design, validate and manufacture components locally.

The current headcount in India would be close to 2,500 people. The R&D team is very small as of now as it has just started and the focus is on India projects. However, we plan to support our overseas units in future. This is another reason behind setting up the design and testing infrastructure in India.