In­dian tur­bocharger in­dus­try to grow at CAGR of 14% to 2020: ICRA

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In In­dia, tur­bocharg­ers are present in over 90% of diesel ve­hi­cles, though its pen­e­tra­tion level in petrol ve­hi­cles is rel­a­tively low. In the back­drop of chang­ing cus­tomer pref­er­ence to­wards petrol en­gines in the pas­sen­ger ve­hi­cle (PV) seg­ment, the do­mes­tic tur­bocharger in­dus­try, which is at­tuned to the diesel tur­bocharger, could face some tem­po­rary read­just­ment pains, es­pe­cially for sup­plies to the pas­sen­ger ve­hi­cle in­dus­try. Nev­er­the­less, in­creas­ing ac­cep­tance of tur­bocharged petrol en­gine would sup­port de­mand for the tur­bocharger in­dus­try over the medium-term.

A tur­bocharger is a de­vice which im­proves power out­put of en­gines us­ing ex­haust gas to in­crease over­all air in­take in the com­bus­tion cham­ber. Fuel com­bus­tion is de­pen­dent on the quan­tity of fuel and the amount of air avail­able in the com­bus­tion cham­ber. Tur­bocharger al­lows more com­pressed air in­side the en­gine’s in­take man­i­fold, re­sult­ing in more ef­fi­cient fuel com­bus­tion and hence su­pe­rior power out­put, im­proved fuel ef­fi­ciency and lower ex­haust emis­sion.

ICRA ex­pects mar­ket po­ten­tial for the do­mes­tic tur­bocharger in­dus­try to grow to about Rs 2,800 crore by FY2020, reg­is­ter­ing CAGR of 14%. While vol­ume growth could be mod­est at around 8-9% CAGR, value growth will be healthy as higher value added so­lu­tion (VGTs, twin spool turbo) as well as new prod­ucts to meet stricter reg­u­la­tory re­quire­ments drive higher con­tent­per-ve­hi­cle. While the share of diesel ve­hi­cles in In­dia is ex­pected to mod­er­ate, in­creas­ing share of tur­bocharged petrol en­gines as well as su­pe­rior re­al­i­sa­tion will drive the over­all tur­bocharger mar­ket. Con­sid­er­ing, gross mar­gins of 45% and siz­able raw ma­te­rial re­quire­ments (55% of the in­dus­try’s turnover), pri­mar­ily sourced from Tier II/III an­cil­lar­ies, de­mand for tur­bocharger com­po­nents is ex­pected to drive Rs 1,300-1,400 crore of revenue for Tier II/III an­cil­lar­ies by FY 2020.

On an av­er­age, for a pas­sen­ger ve­hi­cle, a diesel tur­bocharger costs Rs 4,000 – 5,000 whereas petrol tur­bocharger is priced at Rs 15,000 per unit. Petrol tur­bocharg­ers are de­signed to op­er­ate at much higher RPMs (as com­pared to diesel coun­ter­parts) which re­quire the com­po­nents to with­stand high tem­per­a­ture; this ex­plains the cost dif­fer­ence be­tween petrol and diesel tur­bocharg­ers. Cost also varies de­pend­ing on the type of tur­bocharger i.e. a twin scroll tur­bocharger-will cost al­most double a sin­gle scroll tur­bocharger, whereas rel­a­tively com­plex vari­able ge­om­e­try tur­bocharger could be even more costly. Re­al­i­sa­tion of tur­bocharger for trucks is in the range of Rs 10,000 to Rs 12,000.

Tur­bocharg­ers in petrol ve­hi­cles

Cor­po­rate Av­er­age Fuel Ef­fi­ciency (CAFÉ) norms no­ti­fied by the Gov­ern­ment of In­dia in April 2015 man­date a 14% im­prove­ment in fuel ef­fi­ciency by FY18 and 38% im­prove­ment af­ter FY22 for OEMs. In or­der to meet the stip­u­lated tar­get by April 2017, fleet fuel ef­fi­ciency for petrol and diesel ve­hi­cles should im­prove to 18.2 Kmpl and 20.41 Kmpl, re­spec­tively, from the cur­rent av­er­age of 16 Kmpl and 18 Kmpl, re­spec­tively. Tur­bocharger, cost ef­fec­tively, could drive a 20% plus im­prove­ment in fuel ef­fi­ciency, as

Honey­well tur­bocharger

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