‘Indians are increasingly getting gadget-oriented’

Ashok Ramaswamy took over as managing director of Delphi India last July. He has been with the company for over two decades, which includes long stints here and in the US. In a tete-a-tete with DNA Money’s Murali Gopalan, he speaks of Delphi India’s plans to focus on electronics in a big way.

What are your priorities for Delphi India?
Going forward, we are looking to expand our product portfolio significantly using our global technology. There is also a strong pull on technology by Indian customers and OEMs. We believe India is ready for a lot of these technologies and that will be our strategy.

We have four manufacturing plants in India, of which three near Delhi make thermal products, HVAC systems, wiring harnesses and powertrain components for Indian OEMs. The fourth is a steering plant in Bangalore, which is also home to our technical centre that started in 2000. There are 650 engineers working here.

What is the kind of work done at the technical centre?
Engineers here have been working on many cutting edge technologies that will be displayed at the Auto Expo in Delhi. These were developed over many years for the global market and it is now exciting for our engineers to have them for India too. The Expo will showcase a lot of these technologies meant for India. There will be 50-60 displays highlighting different technology elements as well as concepts meant for other markets.

India is rapidly pulling all the technologies and it will not be long before many leading edge ones come here. One example is the portable navigation device, which has the map database for India and will be priced attractively. Indians are very value-conscious and, of late, increasingly getting gadget-oriented.

How difficult is it to meet the costing challenge?
The engineering centre looks at our global designs and tailors them for needs here. Often, to meet targets, we have to take out functionality features and functions. Those needed for India are different from how they are used in other markets. We are working on all these techniques to reduce costs.

Could you throw light on future investments in India?
Since we are looking at huge business growth, investments will be determined by capacity. In some of our plants, it is relatively excess, as in the case of powertrains while this is marginal for thermal systems. There is no surplus capacity in wiring harnesses.

It is hard to quantify investments in terms of dollars but we will invest what is required to grow our business five times in five years.
 
We have invested over $200 million so far, which includes money for the technical centre too.

How important is India for Delphi’s growth in Asia-Pacific?
Growth in Asia-Pacific is going to be about three times within 5-6 years from Delphi’s perspective. Of this, India and Asia will account for a lion’s share.

The India growth, on a conservative side, may be about five times the current revenues in five years, which is phenomenal. We have had very little electronics presence here but this is going to change.

This year, we have already booked considerable business with OEMs in India and a lot of the growth is going to come in from the electronics front.

Do you think rapid dieselisation is inevitable in the auto sector?
We are prepared for all kinds of technologies including flex fuel, direct injection gasoline as well as diesel. It is very tough to predict what the road ahead is going to be like.

We need to adapt to the market and this is where something like flex fuel is critical. Here, it is able to detect different types of fuel and then change the engine calibration/algorithm to deal with it. We will roll this out in India soon.

Does servicing a typically small car market become difficult from the viewpoint of costs?
There are challenges in terms of cost pressures and customers still want the best in terms of features and design. We do cater to the small car segment and are designing products in India.

We had a bigger challenge five years ago with motorcycles and there is a success story when we developed the smallest engine valve system in the world which is in the market today. And this is how we plan to build our learning base for small cars in our tech centre.

We supply to Harley Davidson worldwide and have brought those lessons to the car market because of the pricing. Our own think tank did not believe we would meet the bike challenge in India. Finally, it is all about thinking out of the box.

Will India play an important part in global sourcing?
There is considerable sourcing happening from here for our global needs but I am focused on growing our production capacity in India to meet the needs of OEMs.

We are supplying to global OEMs in India and working with Indian OEMs overseas. Free trade agreements will be a big opportunity too. We have a mega centre for electronics manufacturing in Singapore and this is what we will leverage for our initial products in India. It will be a jumpstart for us and could do away with creating capacity for this purpose here.

How would you compare India to China?
India is about 6-8 years behind China in this growth curve from the perspective of number of vehicles per year. Both countries are very cost-conscious (in terms of vehicles) for the domestic market and are also looking at exports to Europe and North America.  OEMs in India and China also need partners for whole systems solutions in issues like safety and engine management systems and this is where companies like Delphi could fit in nicely.

From my point of view, infrastructure growth in China has been phenomenal and rapid and this is where India needs to catch up. 

The public-private partnership should intensify and go beyond the Golden Quadrilateral. People need to develop better driving habits too and a little bit of education here will help immensely.