Escorts banks on in-house innovation to develop critical rail components
Escorts Group’s rail division has come up with an innovative brake system that are ‘Made in India’ for the Indian Railways. Escorts manufactures and supplies critical railway components such as air brake system, EP brake system, draft gears and couplers, composition brake blocks, dampers and rubber components to Indian Railways.
“For any Make in India programme to be true, you have to build inhouse capability. If you see the brake systems here, only multinationals have been supplying them. We are the first Indian company that has come with our own brake systems,” Dipankar Ghosh, CEO of Railway Equipment Division, Escorts Group, told Auto ComponentsIndia. The Haryana-based company has been operating since in 1944 and is present in sectors of agrimachinery, construction and material handling equipment, and railway equipment. Dipankar said that Escorts is the only company to do the bogey-mounted brake systems in the country. “Only when you develop and build products in India, the prices can come down. We have invested heavily in R&D to develop deep domain knowledge. And now we are capable of building products in India. It is very easy to buy the technology, but if you buy, technology do not come to you,” he said.
Speaking about the new brake systems, Dipankar states,” At present people buy axle-mounted brakes from multinational companies. What happens is that they continue to make money by giving you old technology. We have modified the old brake systems through domain knowledge and have a very compact braking system now. These are now being used by MRVS (Mumbai Rail Vikas Corporation), and all the coaches have this braking system. Similarly, there are many high-end brake electronics that are being imported by the Indian Railways, it has 28 microcontroller components inside. This helps to interact with other parts continuously and monitor the brake systems. We have developed it independently. Multinationals charge Rs 40-45 lakh per set and we offer it at Rs 20 lakh. This is because we are so confident about our technology.”
He said the couplers that were initially used were foreign brands. The special coupler would help prevent accident, as it would not climb and topple if a mishap happens. MNCs were selling for Rs 5 lakh each and Escorts sell it for Rs 2 lakh. The scenario is similar in shock absorber segment too. “Most of the multinationals are out. In another 2-3 years, we will give them a run for the money. We are confident about it and we are investing significantly in capex and in R&D talents.”
Railway cargo wagons require a special braking system and the engineering firm is into that too. It is a special type of low-weight brake system with no mechanical leverage. So, the advantage is RAMS - Reliability, Availability, Maintainability, Serviceability. The RAMS quotient goes up very high and this is what the car manufacturers expect. It is only a question of time to see private wagon builders actually owning this. “Across Europe, the track is owned by someone, the rolling stock by
some other and the user is someone else. This is because railways will not be able to manage everything. Indians are also asking for their own wagons to be operated,” he said.
Sharing more on the investments the CEO said that around 3-4% of the turnover will go into it, which is around Rs 400 crore. This investment happens on a yearly basis. The engineering firm also has a 3-pronged approach. With building it in-house it offers many global technology leaders to have a collaboration for entering the Indian market and will also reduce the cost for their home country by at least 30%. “We will do lowcost engineering here. For many companies, we are reducing 20-25% of their cost, even for their home country. Now they have started buying a lot of casting forging from us. If they are deep into this, we can basically design machine and send it to them as it is much cheaper. This is more than exporting, called contract manufacturing,” Dipankar said.
Escorts Railway Equipment Division will also be developing new products that include different types of brake system, air conditioning system, doors, and many other systems. As the automotive division of the company was making a loss, it has sold it and is now concentrating only on the three divisions. Group business market capital is about $1 billion, and ATP is around Rs 6,000 crore.
At the expansion side, the company already has an 8-acre plant and is setting up a second plant. Seeing the profitability of the railways’ sector, the company’s camshaft plant is now being taken over by the Railway Equipment Division. It will be manufacturing couplers and air conditioners and the capacity will be of 2.5-3 tonne. Around Rs 400 crore of investments will go into technology expansion and major acquisitions, says Dipankar. The acquisition will be more for a technological reason. The company targets around 25-30% CAGR for the next 4-5 years. On innovations, the firm is bringing in new ideas for software and electronic segments. “We cannot do much in the mechanical part except reducing some price. This is because safety is involved,” he said.
On contract manufacturing, he said, “We will manufacture the design and also ask them to send their design. The advantage is one, can make money. Second, our overall capability will grow. This is what we want. We will make a little bit of money, but a huge amount of technological capability. For example, the thin wall castings. If you design for a German major once we could design it ourselves for a different product. There are several sources of getting knowledge and we are making use of that.”
The company also plans to increase its exports to South-East Asia and the Middle East. “We are not entering Europe because of the many hassles and entry barriers. In that way, we feel the benefits in the African market and we are doing quite good there. Exports should grow and now it is just 5-6%. We expect it to grow at least to 15-20%. For the Railways we have taken a target to achieve around Rs 1000 crore by 2022,” Dipankar said.
Linkages with a unique design
Escorts axlemounted brake system, which is an in-house development by the company
Dipankar Ghosh, CEO of Railway Equipment Division, Escorts Group