From passenger vehicles to CVs: Shraddha Suri Marwah
Subros Limited is replicating its passenger vehicle (PV) success in the commercial vehicle sector which is taking to thermal systems in a big way, Shraddha Suri Marwah, Managing
Director, Subros, told H S Billimoria, CEO, Next Gen Publishing, and Ashish Bhatia, Senior Correspondent, Next Gen Publishing, in an exclusive interview. Edited excerpts:
Q: Beginning with passenger cars and finding a firm footing in the commercial vehicle market, how do you look at Subros journey?
Shraddha Suri Marwah (SSM): Subros Ltd. was established in 1985 as a joint venture between the Suri Group, Denso Corporation (Japan) and Suzuki Motor Corporation (Japan). It was the result of a brave decision of the chairman of Suri Group, Ramesh Suri. Over 95% of the passenger vehicles sold were without an air-conditioner. It was the foresight of the promoters of the company that led to the establishment of Subros. Today, Subros has a capacity to produce 1.5 million units. It is commanding 40% share of the Indian passenger vehicle market. We are keen to replicate the same success in the commercial vehicle space. Incidentally, we see the same trend in the commercial vehicle space that was seen in the passenger vehicle space in 1985. Over 95% of the commercial vehicles sold are without an airconditioner. It is because of the government notification (that driver cabins of CVs should have a blower starting January 01, 2018) that a pull in the direction of thermal systems is emerging. Since all the processes are the same when it comes to CVs from a thermal engineering point of view we were able to smoothly expand into the CV space.
Q: How are you driving ahead Ramesh Suri’s vision?
SSM: The belief of Ramesh Suri in the thermal product domain is commendable. It is his vision that is driving us. We are following him. His mantra, ‘Perfection is a never-ending journey’, we continue to follow at all the levels of business we conduct. We continue to invest in new technologies and develop new products. We have retained the confidence of our customers and are partnering with them for their programme road-map. It is his vision that has led us to expand into new areas.
Q: How do you look at the association with Denso Corporation and Suzuki Motor Corporation?
SSM: Our association with Denso Corporation and Suzuki Motor Corporation is about seamless communication. We share a strong bond of trust and support. Denso, as a technology partner, has been a pillar of strength. It has been helping us to address the needs of our clients like Maruti Suzuki. In 2012, we formed a joint venture, Denso Subros Engineering Center, to focus on application design and new technologies.
Q: How much do CVs contribute in revenue terms?
SSM: Passenger vehicles are currently contributing 85-90% of the revenue. The remaining is from CVs. We are focusing on CVs in a big way as we feel that this business will grow at a faster pace. We have a clear plan to have 75% revenue from the PV business in the future, and the remaining 25% from commercial vehicles. We see demand emerging from the state transport organisations as they expand their AC bus fleet. The government notification for fitting of blower is also creating a pull. Infrastructure improvement, we are confident, will increase the demand for air-conditioned CVs. We see demand coming from government’s focus on airconditioning locomotive driver cabins and local rail rakes too.
Q: What rate of growth in CVs are you looking at?
SSM: At present it is at a nascent stage, we see the CV thermal market growing at a fast pace in the near future.
Q: Isn’t the cyclical nature of CV market in India a challenge?
SSM: The cyclic nature of CV market in India is not different from the global markets. Market demand for better and faster transportation is facilitating the growth. Government support and regulations have been a positive growth driver as well. We don’t see a challenge.
Q. How do you look at the bus market growth?
SSM: Public transport will play
a key role in decongesting the cities. Improving living standards and growing aspirations are driving the demand for AC buses. The market in percentage terms may not be significant today, in the near future we are confident of it growing to 30% of the total market size. Rise in road infrastructure will lead to AC bus demand. We see a strong opportunity in that space.
Q: How big is the market for tractors, construction and earthmoving equipment?
SSM: Concerns of health and safety are creating demand for air-conditioned operator cabins in tractors, construction and earthmoving equipment. Companies focusing on employee health are noticing that AC cabins are improving driver efficiency. Demand of AC is thus growing. It is growing especially in tractors and backhoe loaders. Enhanced productivity due to AC cabins is leading to better return on investment.
Q: How is business faring for transport refrigeration solutions?
SSM: Land routes account for the largest market share in global transport refrigeration units market. Climate controlled transportation is influenced by trade patterns and transportation costs. Driving growth in this market is globalisation of food trade. Growth in Asia-Pacific is high. In India it is led by the development in food retailing infrastructure, changing food consumption patterns (growing preference for frozen and chilled food), growing population, rapid urbanisation, and stringent government regulations. Providing large scope for expansion, improvement in crop realisation will lead to a rise in demand for cold chain logistics. We are ready. We are in fact providing turnkey solutions for both cabin and AC fitment to OEMs, and to other markets.
Q: Do you expect the truck segment to be a growth driver?
SSM: As of now, a ventilation system is mandatory. AC is optional. We, as a pioneer in the thermal field, have secured a 70% market share. Our product lines are ready, and we have begun supply in the last quarter. This market is large and will be a key driver in the long run.
Q: How is GST influencing the CV side of your business?
SSM: There was not much change in the billing pattern. Prices came down. The benefits we passed on to the customers after GST has created a positive impact.
Q: How are you helping your clients to meet the regulatory requirements?
SSM: We are committed to environment protection. We offer eco- friendly products. Our priority is to provide high efficiency air-conditioning systems that emit less and help achieve higher fuel economy. Our products ensure maintenance of discharge air temperatures at idle and during stops in mild hybrid vehicles especially. We offer ECMs that meet CO2 and NOx emissions regulations.
Q. What are the focus areas in R&D?
SSM: The Subros Technical Centre (STC) at Noida develops new products. It develops new products for model launches with assistance from Denso. Denso Subros Thermal Engineering Services takes care of the application and allied services. Our focus is on enhancing technologies to meet the future requirements of customers. Our emphasis is on local manufacture with global specifications. The road map for future technologies the Indian market will demand is in place. We are working closely with our partners to enhance our technological prowess, and to fully support customer vehicle programmes. Our state-of-the-art testing facilities are enabling us to evaluate all aspects of vehicle thermal system management. It is helping us to be a reliable partner for component and system validation.
Q: Is the forging division captive to Subros or does it serve customers outside?
SSM: The forging division of Subros is equipped with pressure die casting and squeeze die casting technology. These technologies are required for compressor shells and castings. Majority of the output of the forging division is captive. There are other products, which the division manufactures for OEMs.
SSM: To be a market leader is a tough task. We have always believed that competition is good for health. It has led us to challenge ourselves; to improve on all fronts.
Q: How do you look at competition?
With an estimated market cap of Rs 26.64 billion, what are the opportunities and challenges that you foresee?
SSM: We are anticipating continued growth in the automotive sector due to stable global economic factors, emphasis on local manufacture, and infrastructure growth. We are catering to the needs of the existing and new automakers in India. The commissioning of the Gujarat plant will help us in doing so. Due to increase in the share of business from the existing customers, and because of expanding into new business domains like bus and rail air-conditioning, truck refrigeration, and radiators, we are anticipating strong growth. We see growth in the promotion of eco-friendly automobiles in India. We have made extensive localisation plans for key components to provide products that employ the latest technology at low cost. This, we are confident, will help us to sustain growth and profitability, and minimise the impact of fluctuation in economic indicators.