As the world’s leading supplier of diesel cold-start technology, Beru of Germany has a rather modest address in India. Tucked away in an alley of Pune, the corporate office of Beru Diesel Start Systems does not look particularly imposing. But, then, appearances can be deceptive as products from here service big names in the automobile business.
When managing director, Jayant Dave signed the 51:49 joint venture with his collaborator in late-1996 and subsequently got the first batch of production equipment in August 1997, the Beru brand was unknown in this part of the world. “We started with glow plugs for the Indian market which, at that point in time, was largely limited to Tata Sumo and Safari. There were also some Mahindra jeeps with the Peugeot engine,” he recalls.
The priority then was to break into the OEM business. At that point of time, glow plugs were the core business and continue to remain so. However, it was tough penetrating the market because the closest competitor controlled the entire market and making a dent there was not going to be easy. Today, Dave is justifiably proud that his company has an over 50 percent share of the Indian glow plugs business. “What has also helped is the rapid growth of the automotive industry along with a greater penetration of diesel which is good for our business. As an aside, I can proudly add that engines designed by Tatas and Mahindras with Indian engineers are almost at par with those produced anywhere in the world,” he says.
In the process, there is a need for glow plugs that measure up to world standard and it is Beru’s endeavour to focus on high quality products sold at Indian prices. Beru has four plants worldwide for manufacture of glow plugs. The main facility is in Ludwigsburg, Germany, where the parent company is headquartered. It also has plants in Korea, Italy and Pune.
Volumes in India have been picking up steadily over the years and the joint venture makes 16 types of glow plugs, the largest range for any Beru operation across the world. Korea’s volumes are greater but it produces only four varieties. Tata Motors has selected the latest-generation glow plug for its new 1.4-litre diesel engine. “We are lead suppliers to this engine and the company has asked for 1.2 million glow plugs,” he says.
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Beru Diesel Start Systems also produces electronic control units (the glow plug control units) called timers in small volumes. Last year, it launched grid heaters, which are heating aids for larger engines, located between the intake manifold and the engine. They facilitate heating the intake air for better combustion. “These are also produced in Beru Ireland and we are the second Beru plant worldwide to produce them. We meet 100 percent of Ashok Leyland’s needs and are pitching with Tata and other big engine producers. We expect this business area to grow substantially in the coming years,” says Dave.
The company is also looking at Maruti’s upcoming diesel project (the 1.3 Fiat Multijet) for further growth. For the record, Beru already supplies glow plugs to Fiat’s diesel plant in Poland. The Indian arm is working on a 2.2-litre engine of M&M to which it will supply a very modern plug. The engine is currently undergoing cold test trials at Beru’s German headquarters.
“We will also be participating in Hyundai's planned diesel programme because of Beru Korea’s longstanding association with Hyundai. There is a possibility that we could get Beru’s range of spark plugs into India and that will help our growth,” says Dave. This will be a significant move for Beru’s India operations because the market is very large and extremely price-sensitive as well. Beru signed on Lucas India about seven years ago as its national distributor to serve the aftermarket. It expects the business to grow 30 percent this year. Dave says that in the future, there is also a possibility of Beru buying back a significant volume of parts from India. The process of identifying suppliers from electronics, manufacturing, components, parts and sheet metal component industries has already begun.
Worldwide, Beru is also known for a whole range of automotive electronics products besides the heating systems. Spark plugs and ignition coils could be sourced out of India. Beru Diesel Start Systems reported a turnover of about Rs 25 crore and has grown at 30 percent annually over the last three years. Profits have been “reasonable”. It has lined up some investments and has recently installed machinery worth Rs 2.5 crore. In the pipeline is some special equipment for quality and analysis.
Last year, in a major global development, BorgWarner picked up a near-70 percent stake in Beru. Dave believes that this may not have an immediate fallout in India in terms of synergies as the companies operate in different product groups. “Synergies, if any, will be restricted to policies, planning and financials, but we would want to maintain our brand identity,” he says.