Ashok Leyland’s associate company is to supply an in-house-developedexhaust aftertreatment system to Europe’s leading truck and bus maker.
With new emission norms ushering in advanced technologies for exhaust aftertreatment, Ashok Leyland Ltd’s (ALL) sister concern Albonair GmbH of Germany, is the latest to focus on this sector. It has developed an aftertreatment system for cleaning exhaust gases in commercial vehicles, leveraging advanced Selective Catalytic Reduction (SCR) technology to meet Euro 6 emission norms.
Targeting European customers initially with its latest aftertreatment system, Albonair has bagged its first order from a leading truck and bus manufacturer of Europe for whom it will be a sole supplier. Supplies to this global OE will kick off in 2013 when Europe transits to the new Euro 6 emission norms.
Interestingly, among OEs, Germany’s Daimler leads in Europe both in buses with its Mercedes and Setra brands and in trucks with a little over 22 percent of the market share. MAN is second in trucks with close to 18 percent share with Volvo at third place.
If Volkswagen is considered a truckmaker by virtue of its majority ownership of both MAN and Scania brands, then VW could qualify as the largest in Europe.
In buses, Irisbus Iveco ranks number two with MAN with its MAN and Neoplan brands at number three. At any rate, both MAN and Volvo are significantly smaller in buses than Daimler.
While Albonair's product launch pad will be the EU, talks are also underway with four to five major global OEs for the exhaust aftertreatment system with supplies to start in about two years when the product is readied for the new businesses.
“We are a component supplier for this advanced technology to a very big European customer. India is incidental for the exhaust aftertreatment system and Albonair is supplying the components for BS IV buses of Ashok Leyland as well,” says Dr V Sumantran, member of the Board of Ashok Leyland and chairman, Ashok Leyland Defence Systems.
Almost like a fuel injection system, the aftertreatment device comprises a complicated combination of hardware and electronics systems including a pump, tank containing urea, electronics system, a doser, ECU, pipes and connections, catalyst in exhaust system and post-catalyst sensor. “We already have an operation in India and are assembling the systems in our Sriperumbudur plant near Chennai,” elaborates Dr Sumantran.
Ashok Leyland has invested Euro 100 million in plant-specific systems both in Germany and Sriperumbudur, mainly funded through internal accruals. This business is expected to rake in revenues to the tune of Euro 100 million per annum by 2015 after product maturity. The electronic control of the aftertreatment system has been developed in-house by Albonair.
To profile the product, SCR technology controlled by engine characteristics of the vehicle can be used with any application. With the reducing agent AdBlue, toxic nitrogen oxides are converted at the catalyst into innocuous water vapour and nitrogen. This method is being used in series-produced European CVs since 2005.
The reducing agent AdBlue is a urea solution in water (32.5 percent). The solution is injected with a dosing unit (UDS or Urea Dosing System) directly into the exhaust flow. The non-toxic, colorless and odourless urea solution is available at many gas stations in Europe under the trade name AdBlue.
Vehicles with SCR systems are equipped with an additional tank. Moreover, these systems have to be designed as compact units for the packaging space of mufflers and include exhaust aftertreatment using SCR technology and muffler in one housing.
In addition to the parts developed by Albonair and supplied to ALL for domestic use, Ashok Leyland also offers system integration in close cooperation with engine developers at Chennai.
Dost powers on
Meanwhile, the Dost – the first light commercial vehicle from the ALL-Nissan joint venture – is faring well in the market with demand exceeding supply. “Dost has a four-month waiting period and to ensure adequate supplies we have started a brand new assembly line at our Hosur manufacturing facility. We produced 1,600 units of the LCV last month, and will do a little more this month. We are hoping that the waiting list will come down as we ramp up, month on month. The ramp up has taken time due to the supply chain that has to ramp up in tandem,” remarks Dr Sumantran.
The company is going slow on the export front for the Dost till the domestic demand issue is addressed. Plans are also underway to expand the dealer network to north India from its existing presence in seven states including four southern states, Maharashtra, Gujarat and Rajasthan.
“We are also expanding the product line-up and the next to follow will be the Stile Multi Purpose Vehicle (MPV) and later the Partner LCV. So we have a product line planned for two years,” he adds.
This year will also see the launch of the first Nissan product, the Evalia MPV, from the ALL-Nissan JV. Interestingly, the Stile and the Evalia are examples of badge engineering. Both are based on the Nissan NV200 van. While the Evalia will be sold through Nissan's passenger car network, the Stile will be sold through Ashok Leyland's LCV retail network.
The Stile, slated for rollout in 2013, is being projected more as a commercial passenger van for hotels, leisure and travel industry, and for use as a BPO shuttle or delivery van.
While the Stile will have a monocoque construction with front-wheel drive and will be weight and space efficient, the next product Partner with five- and six-tonne GVW will bridge the gap between the Dost and Ashok Leyland’s Ecomet LCV line.
The Partner will come with contemporary styling and, according to Dr Sumantran, set a new precedent for an LCV with an air-conditioned cabin and better-quality power steering compared to products in this category.
Meanwhile, Ashok Leyland’s engineering subsidiary Defiance Technologies has begun work on the small car project of ALL-Nissan.
Defence sector buffer against a slowdown
Like other CV makers, Ashok Leyland is using the defence sector as a buffer to tide over the cyclical nature of the CV business. The company displayed its new range of products at the recent Defence Expo. Ashok Leyland Defence Systems, a JV company engaged in the manufacture of specialised tactical and armoured vehicles, unveiled the first of the Colt tactical vehicles – the Light Tactical Vehicle (4x4) – developed through ALL’s partnership with Panhard General Defense of France. A new range of product concepts and systems, developed with Krauss MaffeiWegmannGmbh (KMW) of Germany was also showcased.
Ashok Leyland is exploring growth opportunities overseas with Panhard and KMW but at present no tie-up is in place for it. ALL has a partnership with them for undertaking testing and trials are underway for many of its defence offerings that are expected to last for two years with commercial bids to follow.
Ashok Leyland Defence is also developing a range of armoured vehicles with military payloads from 1.5 to 16 tonnes, on the Colt, Stallion and Super Stallion platforms that will address requirements for a host of military applications.
The company also showcased the Super Stallion 8x8 High Mobility Vehicle (HMV) at the DefExpo. “This heavier platform builds on the heritage of the Stallion, of which more than 65,000 vehicles are deployed by the Indian army,” says Nitin Seth, executive director – Defence Business, Ashok Leyland.
The Super Stallion platform can be offered for a variety of applications like field artillery tractor and mounted gun with different transmission and driveline configurations.
Besides, ALL is also bidding for the prestigious Futuristic Infantry Combat Vehicle (FICV) project. FICV is a first in the modified Defence Procurement Policy’s ‘Make’ programme and the government is for the first time considering four private consortiums who are bidding for it.
There's big money to be made in the defence business. The Indian Army plans to acquire combat vehicles to the tune of $10 billion for which local players such as Larsen & Toubro, Mahindra & Mahindra, Tata Motors and Ashok Leyland are vying.
Two OEMs will be chosen and charged with the responsibility to produce prototypes in a record time of about three years. A major part of the design and development project will be funded by the Ministry of Defence with the selected OEMs expected to pool in with about 20 percent of the overall cost.
Under the programme, local firms will be allowed to opt for technology tie-ups with foreign companies. It is believed that Ashok Leyland and Larsen & Toubro have bid as a team while the state-run Ordnance Factory Board is also bidding. The chosen vendor will be expected to build 70 percent of the vehicle.
Ashok Leyland is also working on providing mobility solutions to the CV sector through Defiance Technologies deploying an in-car infotainment set in 1,400 buses at Chennai. This has been facilitated by telematics boxes with connectivity back to the base with linkages to the passenger information systems.
Dr Sumantran visualises huge opportunity to generate value for fleet operators or bus transit operators harnessing these technologies. “We are offering them to large Middle Eastern fleets, and a large soft drink distributor is also applying one of the systems from Defiance,” he points out.
Finally, as Ashok Leyland eyes overseas growth in its bus division where it grew initially on the back of the Optare acquisition and its Ras-al-Khaimah assembly unit, its focus remains on expanding its U-truck business and countering cyclical reverses through diversification.
INTERVIEW WITH DR V SUMANTRAN, EXECUTIVE VICE-CHAIRMAN, HINDUJA AUTOMOTIVE LTD
Where is Ashok Leyland headed and why the diversification into defence and IT services?
We have always been a medium and heavy duty trucks and buses commercial vehicle company. Around 15 years ago, we decided to diversify from this deep cyclicality because every six years the truck and bus industry gets into a dip and the industry gets clobbered.
We felt that defence would be a useful sector that will give us non-cyclical behaviour. Besides, defence has more steady procurement yearly, albeit it may not be in a very large quantum, and helps to iron out the very deep ups and downs in the main cycle.
The earlier investments in foundries and engines are upstream value additions. Ashok Leyland is a CV company supported by large vertical upstream integration with planned diversification into defence. The Stallion has been a very successful programme for us with more than 70,000 Stallions in service in the armed forces — we are the largest private sector defence contractor on the basis of it. It is used for troop carriers, recovery vans, fire dousers, hospital vans, water dousers and mobile hospital applications.
We also thought we were too focused on India which is when we acquired the truck business unit of the Prague-based Avia. We also acquired a stake in Optare, which gave us a European presence with a medium-size footprint. It taught us how to run operations in Europe and to absorb the technology of current contemporary products. It also helped us set up a plant in Ras-al-Khaimah.
So, this was a strategy of not being too India-centric and to spread out our footprint. However, we wanted still faster growth. So we looked for white spaces. We were not present in the light vehicle sector, so we inked a joint venture with Nissan and got an LCV business which is now doing quite well. We will be making investments in second and third products as well.
We are also looking at investment going in for infrastructure in India. The road construction, port and construction equipment industry is set to boom. So we effected a JV with John Deere and invested in construction equipment and have a brand new factory at Gummidipoondi in Tamil Nadu.
What are your future plans?
We have decided to invest in environmental technologies as this industry will get more and more pressured to become environmentally responsible whether it is emission systems, clean fuels and clean exhaust which is going to become critical.
So we invested in Albonair which is a 100 percentHinduja Group-owned company in Germany which has also done well. Already, it has got orders and in the next six months SCR (Selective Catalytic Reduction) products will be out in the market for cleaning the NOx emissions in the tailpipe. It is a very sophisticated electronics and hardware equipment that we have developed and have patented a new approach of doing it. It is significantly more efficient as it uses urea as a fuel to facilitate the catalysis.
The next area we are thinking of is about mobility solutions. If it is trucks, how do you manage fleets, how do you manage the backend and how do you manage the logistics? If it is buses, how do you manage the passenger information systems, fleet tracking and fleet optimisation?
To handle this, we created Defiance Technologies to focus on IT services, engineering and manufacturing services. IT and data are going to play an important role in the future and the company has grown to 1,500 people from 23 staffers three years ago. All this means we have gone from being a truck and bus company to a much more global, less cyclical-dependent company and are now moving to being an environmentally better mobility solution company.
Why the focus on CNG?
Ashok Leyland has plans to launch a CNG Dost because certain cities call for CNG usage. We cannot sell CVs in Delhi without CNG and certain cities are also migrating to this policy. This means we cannot be without CNG in some segments.
SHOBHA MATHUR