‘We are firm believers in the quality of profit’: Manoj Kolhatkar

Manoj Kolhatkar, the Managing Director of Gabriel India, a suspension component specialist talks about the company’s global ambitions and more.

By Mayank Dhingra calendar 16 Sep 2023 Views icon7053 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
‘We are firm believers in the quality of profit’: Manoj Kolhatkar

As it eyes its next phase of growth by tapping into advanced technological solutions within its core suspension systems business and diversifying into high-growth products such as sunroofs, Gabriel India is on a mission to transcend into a global automotive supplier whilst keeping a sharp focus on sustainability. Manoj Kolhatkar, Managing Director, Gabriel India, talks about the company’s ambitions to rank amongst the Top 5 shock absorber manufacturers in the world, and confidence on the India story.

How has Gabriel India’s business evolved over the last 60 years, and what are your future ambitions?
We have come a long way, and achieved close to Rs 3,000 crore revenue in FY23. While the first Rs 1,000 crore took half a century, the next thousand came in eight years.

The race from Rs 2,000 crore to Rs 3,000 crore in annual revenues was a matter of only four years. Therefore, there has been a huge growth acceleration recently, particularly in the last year when we had a 27 percent uptick in the top line.

The more interesting part was that the growth in EBITDA margins was almost 46 percent. The exercise to improve our margins continues, and we have a focused action plan – ‘CoRe90’ – which translates to cost reduction in 90 days. Over the past couple of years, we have been growing ahead of the industry, which itself has grown tremendously, with FY23 being a landmark year, making India the No. 3 passenger vehicle market in the world. 

We have an outlander vision of being amongst the Top 5 shock absorber manufacturers in the world. Our strategy is based on four building blocks — domestic leadership, exports, M&As, and technology — which will help us achieve our goal.

How is the company geared in terms of new product development and what are its R&D competencies?
While our average R&D spend has always been in excess of 1.2-1.5 percent of our topline, we have put an additional push into new product development over the last couple of years.

Our expat CTO who is an expert in suspension systems is now leading our recently-commissioned European technology centre — Gabriel European Engineering Centre (GEEC) in Belgium, where highly-experienced engineers are now working on active and semi-active suspension systems for passenger vehicles.

In addition, we have a highly-competent engineering workforce at our technology centres at Chakan (Maharashtra) and Hosur (Tamil Nadu), where over 70 engineers are developing new products, and have filed more than 75 patents in the suspension domain. The technology centre at Chakan is the best in the country in damper testing with contemporary labs equipped with state-of-the-art equipment from MTS. We also learn from our partners — KYB, Koni, and Yamaha Hydraulics, as well as our customers.

The technology centre in Hosur also supports our manufacturing operations by virtue of an elaborate process engineering team, which has conceptualised and developed several machines and automations being deployed at our shopfloors to cater to our unique requirements. This allows us to be agile and swiftly response to our customers’ requirements.

What technology trends could be expected in the space of vehicle suspension systems?
The space of active- and semi-active suspensions is evolving globally and we are looking at a global play with semi-active suspension systems being designed at our technology centres and will be ready by FY25.

We believe we will be able to deliver a frugally-engineered product that offers high value, and we are currently engaging with customers in the two-wheeler and passenger vehicle segments in Europe and India for the semi-active suspension systems.

Having said that, we cannot let go of the passive suspension systems, which will continue to be the mainstay, and that is where we have kicked off a next-generation valve to strengthen our offerings in this space as well. We have an all-disc design for faster and quicker response in terms of suspension damping, and our focus is on passive, as well as semi-active suspension systems for the future.

At Gabriel India, we have also taken a Koni readymade product, which has enabled us to offer the frequency-selective damping (FSD) capabilities to our customers. The Mahindra XUV700 is equipped with our FSD solution, which is a three-dimensional technology, wherein the suspension not only reacts to the vehicle velocity, but also to the frequencies of the bumps, thereby offering much superior ride comfort. The FSD rides in between the passive, and semi-active suspension, and therefore, is a highly cost-effective solution. We are targeting to offer it to more customers.

Does Gabriel India envisage future capacity expansions to cater to growing market demand?
We are investing Rs 30 crore each in the current financial year at our PV plants in Khandsa (Gurugram) and Chakan (Pune) to augment our capacities. The increased demand, as well as Gabriel India’s increased PV market share which has gone up to over 30 percent from being less than 20 percent a couple of years back, has also made us look at an additional footprint in India.

We are looking to set up a new plant that will cater to both passenger vehicles, and two-wheelers, along with a little bit of backward integration with having in-house castings of our two-wheeler front fork outer tubes. There is more scope for backward integration as it helps us address scale, as well as makes us more competitive.

While we are currently in the phase of land acquisition, the new plant in South India will see the start of production in FY25.

Furthermore, we also have a good land bank at our plant in Dewas, Madhya Pradesh, that can be leveraged to cater for growth in our commercial vehicle suspension exports.

We have also commissioned a brand-new paint shop in this facility, and are further expanding to do some backward integration.

What is Gabriel India’s diversification strategy? What is the ideology behind the recent foray into sunroofs?
While we have always stuck to our core, and excelled in the suspension domain, we have been eyeing product diversification opportunities to cater to the changing aspirations of the Indian consumer. Therefore, we zeroed upon a technology-agnostic and high-value product like the sunroof, which emerged as the right product for us to tap into the next wave of growth.

We have an excellent partner in the Netherlands-based Inalfa Roof Systems, and we are excited about the 12-15 percent annual growth potential of this segment.

While we have always stayed connected to the ground, we are now opening the skies. The upcoming 200,000-unit Inalfa Gabriel Sunroof Systems (IGSS) plant in Chennai is nearing completion, and we aim to start supplying to the Hyundai Group in India from January 2024, before adding more customers.

Having said that, sunroof is the first step in our diversification journey and we are actively scanning for more opportunities for M&As in the suspension space and beyond. We are looking at either technology-agnostic products or something which remains on solid ground despite the undergoing disruption in the mobility landscape. There are a lot of high-growth segments both in ICE and EVs, and we are hopeful of another M&A in FY25.

What is Gabriel India’s growth outlook for FY24, and what is the company’s sustainability roadmap?
FY24 has been a good year so far with all vehicle categories showing good performance in the first quarter. There continues to be a robust order book across OEMs, and we do not see any rub-off effect of anticipated slowdowns in other parts of the world.

While the two-wheeler segment was going through a rough phase, the sentiments are far better in the current financial year, owing to a good monsoon, and higher demand from rural India.

The government’s infrastructure push, and several enabling policies have helped India’s automotive story, and the focus on safety norms is further allowing qualitative growth of the Indian automotive sector across all its vehicle categories. The industry is likely to grow in the 8-10 percent range in FY24, and our endeavour will be to better that growth.

While businesses must focus on profit, we are firm believers in the quality of profit. In this regard, we have defined a detailed sustainability roadmap, wherein we are targeting to be water- and carbon-neutral by CY2025, and are taking host of actions such as installing solar panels, and tying up with players such as Tata Solar to increase our consumption of renewable energy, which presently stands at 20 percent.

Our decision making for capex puts sustainability at the core, and any new machinery installation is evaluated from a sustainability perspective. We strive to leave a better planet for our future generations.

This interview was first published in Autocar Professional's September 1, 2023 issue.

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