‘We intend to grow at 25-27% and double our India business’

Swedish multinational Hexagon is looking to double its Manufacturing Intelligence business in India every three years, with plans to significantly increase India’s contribution to the company’s global revenue, says Sridhar Dharmarajan, EVP and MD of Hexagon India, in an interview with Autocar Professional.

By Mayank Dhingra calendar 12 May 2024 Views icon24582 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
‘We intend to grow at 25-27% and double our India business’

Hexagon Manufacturing Intelligence, which is a leading player in the design and engineering solutions space, production systems, and offers metrology tools to a multitude of industries, is bullish about India’s growth potential in the coming years, as the country leverages its strengths to emerge as a global manufacturing powerhouse amidst a volatile geopolitical environment. With increased cash flows into the manufacturing sector, and condusive policies like the PLI scheme, India stands a strong chance to be one among the leading manufacturing hubs, says Sridhar Dharmarajan, Executive Vice President and Managing Director, Hexagon India.

Dharmarajan also aims to grow the Hexagon Manufacturing Intelligence India business at 2.5-3 times the company’s global growth trajectory, to gain more market share internally within the organisation.

How are Hexagon’s solutions aiding companies in the manufacturing space?

For us, manufacturing begins right from the design stage itself as around 80% of the cost of the product gets committed at 20% of the product lifecycle. This is because one decides very early on in the product lifecycle about the kind of materials, be it aluminium, fibre-reinforced plastic, steel, or composites among others, to be used in the product.

Therefore, manufacturing begins at the concept stage itself, and we provide a platform for companies to design the product in the digital world, as well as simulate the complete manufacturing process digitally. Once the product finally gets manufactured, our Coordinate Measuring Machine (CMM) tools help verify the actual dimensions with those of the digital renders. Hexagon Manufacturing Intelligence, therefore, enables companies to ensure that the product is designed, and manufactured as per specifications. Furthermore, we have a connected quality activity, wherein we close the feedback loop from manufacturing to design so that in case there are any deviations, they are resolved to ensure we get the designs right the first time itself.

What is Hexagon India’s growth outlook and what are the company’s growth ambitions?

The manufacturing sector in India is booming, and while the sector’s contribution to the country’s overall GDP was pegged at only 13%, it has grown to about 16% in the last two years. The country’s target is for it to touch 25-30% contribution by 2030, and while our exports stand at around USD 450 billion, by 2030, they are projected to hit USD 1 trillion. After agriculture, manufacturing is the second-largest employment generating sector in India giving jobs to about 25% of the employable population.

We (Hexagon Manufacturing Intelligence) are growing at an average CAGR of 25%, and are targeting more than that. If we grow in the range of 25-27%, we can double our business in the next three years. That is the mantra we are
following and aiming to double our business in India every three years. And, we are confident of doing so as the external environment is also conducive for us to plan in this direction.

Has the current geopolitical scenario sparked a new opportunity for India to become a global manufacturing hub?

While India always had the talent, it struggled to achieve the capex required for setting up manufacturing industries, thereby becoming a services economy. However, owing to the global geo-political scenario, there is a sentiment to de-risk the global supply chain from China, and there is an increased flow of capex to the country as well. Moreover, the government’s production-linked incentive or PLI schemes which are incentivising the manufacturing industry to the tune of Rs 18,000 crore, are acting as a big enabler. Therefore, if India could replicate what China achieved after the financial meltdown of 2008, we have a strong chance of emerging as one of the leading manufacturing hubs of the world in the future. I strongly believe we are heading in that direction.

While India currently contributes to single-digit percentage of Hexagon Manufacturing Intelligence’s overall global revenue, China registers around 30%. That is what we aspire for and we must keep doubling our business in India every three years to achieve such a proportion to global revenues over the next 10-15 years.

What is the mandate for India within Hexagon Manufacturing Intelligence’s global operations?

Starting CY24, India has become a separate region within Hexagon, and therefore, there is going to be a direct focus on the country. We have the global CEO visit us after a long time. The aim is to catapult the India business, which is currently a single-digit percentage contributor in Hexagon’s global business. This attention to India is a very positive sentiment for the entire workforce in the country. India will be able to grow its contribution to Hexagon’s global business to double digits in less than three years. Globally, Hexagon is growing at about 10% year-on-year, and if India can achieve a 2.5-3 times growth rate, we will be able to capture more market share internally, within the organisation.

About two decades ago, India was merely given some projects to execute, however, we are now starting to design and build these software projects in India. We have architected some software projects, and delivered for Hexagon globally. We have around 2,300 R&D engineers located across Bengaluru, Hyderabad, and Pune, and we are growing our R&D business in India, and exploring more opportunities.

What are Hexagon India’s expansion plans for the domestic market?

We continue to invest in people, and while we already have a manufacturing setup in Noida, we are planning to expand in a big way, and exploring opportunities to set up a greenfield facility in cities like Bengaluru. We are exploring possibilities of locally manufacturing products from many other Hexagon verticals as well such as geospatial, asset lifecycle management, among others, so that we can leverage economies of scale. We are evaluating these possibilities, and our future investments will come in human resources, and additional factories.

While the expansion of our Noida facility is already underway, we are evaluating the case of a greenfield project. As we increasingly manufacture locally in India, we will be able to reduce the cost. Having said that, we are looking at first catering to the requirements of the local market, and then exploring export opportunities from India. We are placing our business plan in that way.

What domains does Hexagon aim to focus on for growing its India business?

While automotive comprises 65% of Hexagon’s India business, aerospace and electronics are the followers, with the latter growing at the fastest pace. Electronics is almost doubling every year with the foray of newer entrants into the market.

Therefore, electronics could be a big revenue generator for us in India. Tata Motors, Mahindra & Mahindra, and Maruti Suzuki India are our key customers for design and engineering solutions while major Tier 1 and Tier 2 players are our clients for our metrology and manufacturing simulation tools.

We have been in the business for over 60 years, and over 90% of products from OEMs like Tata Motors, M&M, BMW, and Porsche, have some or the other Hexagon elements in them. We are also adapting to the changing market paradigms, and offering tailor-made solutions for our customers.

For instance, while customers used to buy perpetual licenses of our design solutions, they switched to the subscription model, and are now looking at the pay-per-use license stream to optimise design costs.

This interview was first published in Autocar Professional's May 1, 2024 issue.

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