Lu­cas In­dian Ser­vice ex­pands with in­no­va­tive so­lu­tions: S Mu­ralid­ha­ran

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Lu­cas In­dian Ser­vice (LIS) is an au­to­mo­tive af­ter­mar­ket or­gan­i­sa­tion pro­vides so­lu­tions to a range of ve­hi­cle man­u­fac­tur­ers from two-wheel­ers to cars, trucks, and buses, as well as off-high­way ve­hi­cles. LIS also man­u­fac­tures wide range of auto elec­tri­cal parts and dis­trib­utes through its re­gional of­fices and ware­houses. The com­pany also pro­vides ser­vice and spe­cialised train­ing to ser­vice deal­ers, ve­hi­cle man­u­fac­tur­ers, state trans­port un­der­tak­ings, de­fence es­tab­lish­ments, and fleet op­er­a­tors. In an in­ter­ac­tion with Bhar­gav TS and Sricha­ran R of Auto Com­po­nents In­dia S Mu­ralid­ha­ran, Pres­i­dent LIS, talked about the trans­for­ma­tion by digi­ti­sa­tion and new tech­nol­ogy it is bring­ing to the af­ter­mar­ket in­dus­try and the fu­ture plans of LIS. Edited ex­cerpts:

The last year was fas­ci­nat­ing for the au­to­mo­tive in­dus­try with the tran­si­tion to BS IV and the introduction of GST. How has it been for the af­ter­mar­ket play­ers es­pe­cially in the com­mer­cial ve­hi­cle seg­ment?

Mu­ralid­ha­ran: Yes, the com­mer­cial ve­hi­cle in­dus­try is go­ing through un­prece­dented changes. BS IV was in­tro­duced last year and in the next 2 years BS VI will be rolled out. There were le­gal changes like de­mon­eti­sa­tion and GST. On the tech­nol­ogy front there is in­creas­ing dig­i­tal­i­sa­tion. All th­ese are cou­pled with the over­all eco­nomic and in­fras­truc­ture devel­op­ment. Roads have be­come bet­ter even in the Nort East and in­te­rior ar­eas. All th­ese will jack up the de­mand for var­i­ous types of ve­hi­cles. The BS IV tran­si­tion has hap­pened fast and most peo­ple are sur­prised that it hap­pened smoothly. Peo­ple ex­pected that there might be a lot of is­sues com­ing up along with that change. There were no ob­vi­ous prob­lems. The tran­si­tion of BS IV to BS VI also will be smooth be­cause there will be only ba­sic char­ac­ter­is­tic changes in the en­gine and the al­lied com­po­nents. The only ma­jor ad­di­tion is the ex­haust gas re­cy­cling (EGR) unit. Those who are able to ser­vice BS IV ve­hi­cles can also ser­vice the BS VI ve­hi­cles eas­ily.

The im­prove­ment in road in­fras­truc­ture also in­di­cates that peo­ple do not want to use old ve­hi­cles, which would di­rectly af­fect the af­ter­mar­ket. But, this would be bet­ter for the over­all econ­omy by hav­ing bet­ter, fuel ef­fi­cient and greener ve­hi­cles. At the same time, 15-20 year old cars and trucks have to be scrapped. The other thing that is killing the en­vi­ron­ment is speed. The speed here de­notes the speed of the de­liv­ery. The cus­tomers have be­come so de­mand­ing and all wanted to repli­cated it. Ev­ery­one talks about time and the time of de­liv­ery has be­come so im­por­tant be­cause of e-carts web­sites. Be­cause of this, the truck op­er­a­tors and oth­ers do not think of keep­ing the ve­hi­cle idle, es­pe­cially in the ser­vice cen­tre due to non-avail­abil­ity of parts. This in­creases the pres­sure on the af­ter­mar­ket ser­vices. Gone are the days when it took 3 days to ser­vice. And now, the cus­tomers wanted to the ser­vice to be done in hours for most of the prod­ucts. The pres­sure on the dis­tri­bu­tion of parts and ser­vic­ing of parts has in­creased. More im­por­tant, the re­li­a­bil­ity of the prod­uct in­clud­ing the com­po­nent is so high that the truck man­u­fac­tur­ers also de­mand longer term war­ranty like cars. Pres­sure on war­ranty is very high. The com­po­nents they of­fer have to be more re­li­able and have to last the life of the war­ranty.

Be­cause of all such de­vel­op­ments, the af­ter­mar­ket need of a ve­hi­cle be­gins only from 3-7 years. The first 3 years will come un­der war­ranty pe­riod. And within the 3-7 years, the parts have to be given so fast and ser­viced so quickly. Oth­er­wise, they would not be us­ing it. As a con­se­quence of th­ese, a lot of big­ger fleet op­er­a­tors are de­vel­op­ing their own garages where they do a lot of small

re­pairs. Their logic is sim­ple. In­stead of get­ting the parts from the dis­trib­u­tor now they are sourc­ing di­rectly from the pro­duc­ers like us, which will also al­low them to save some money. This puts enor­mous pres­sure on reg­u­lar garages and on the re­tail chain. The tran­si­tion from BS IV to BS VI, will be one of the rarest points of his­tory of any so­ci­ety with the co-ex­i­tence of 3 gen­er­a­tions of ve­hi­cles. For ex­am­ple, you can wit­ness an in­line pump, ro­tary pump and a com­mon rail. For nor­mal deal­ers or a dis­trib­u­tor, it is a chal­lenge to keep all th­ese and they may not. There­fore, they will start sell­ing spu­ri­ous parts. So, a com­pany like LIS will win only if it reaches the fleet op­er­a­tors or all the small mar­kets with a big­ger bas­ket of items. And that is the di­rec­tion LIS wants to move. We are try­ing to break away and reach fleet op­er­a­tors and

garages with a much wider range of prod­ucts and it is a dif­fer­ent con­cept of ser­vice.

It is an op­por­tu­nity for train­ing be­cause th­ese peo­ple, who are in be­tween the whole­salers and deal­ers, are the ones go­ing to suf­fer. This is an era of GST and some­where around the time, they will crum­ble. Be­cause no­body has such a stock­ing power of ranges. I am not sure what will hap­pen, as the depth and width of dis­tri­bu­tion might be the chal­leng­ing. The ma­jor gain­ers might be the OEMs them­selves. They will sell in their own packs and I think it is fool­ish to com­pete with them. But we can co-ex­ist with the OEM chan­nel and the LIS listed parts are stronger than any lo­cal parts and this will help us to squeeze out spu­ri­ous parts. That’s the di­rec­tion we are pro­ceed­ing.

Direc­tion­ally LIS will go for more reach and we are be­com­ing an af­ter­mar­ket so­lu­tions provider. If a fleet op­er­a­tor has a prob­lem, we don’t just re­pair it, we give him a whole pack­age and that is what we’re fo­cus­ing on. On the dig­i­tal side, we have an app and are try­ing to give to the me­chan­ics. Whether peo­ple will or­der via an app is a ques­tion. He will browse through the net but will go to a re­tailer and buy. In In­dia changes hap­pen very fast. If it hap­pens we are in for some in­ter­est­ing times. And, we are pre­pared for that too. We have a web­site and we are also in e-mar­ket.

Q: As you men­tioned, on one hand the num­ber of ve­hi­cles is go­ing up but at the same time the qual­ity of the prod­uct is also go­ing up, which will even­tu­ally have a dip in the af­ter­mar­ket. In this sce­nario, how do you plan to grow?

Mu­ralid­ha­ran: One, we in­crease mar­ket share by squeez­ing out spu­ri­ous and lo­cal play­ers. We will go deeper into the mar­ket by get­ting garage con­tacts and nowa­days even go­ing to fleet op­er­a­tors. Sec­ond, we are an af­ter­mar­ket so­lu­tion provider which means, ear­lier we ser­viced only the pumps. But to­day, I need some high-pres­sure pipes and some re­cess and over­flow valves. Third, we sup­port them tech­nol­ogy-wise through apps. This means that our lead time has re­ally shrunk. Ear­lier, we used to ad­dress the prob­lem within 3 days, but now we are talk­ing in hours. To­day, we will make up 92% of ser­vices in 8 hours on all In­dia ba­sis. Across the coun­try, if a

ve­hi­cle needs a re­pair we ser­vice back it within 8 hours. We are talk­ing about a full re­pair. That’s the way we pull the cus­tomers.

Q: On ser­vice, you said you are plan­ning to in­crease your reach. What is the cur­rent level?

Mu­ralid­ha­ran: It is all about turn-around time. It does not mat­ter any­more that how many num­bers of work­shops. We have 7000 elec­tri­cians and have a data­base of about 25,000-30,000 elec­tri­cians. But to me that are num­bers. What mat­ters is the time we help the cus­tomer. We are ty­ing up with who­ever pos­si­ble. We have our own com­pany workshop, au­tho­rised ser­vice dealer, we have elec­tri­cians and use all th­ese and set it right. Go­ing for­ward we will be plan­ning to re­duce the time fur­ther. GST, e-way bill, bet­ter roads, tech­nol­ogy etc will help it.

Q: How do you over­look your com­peti­tors?

Mu­ralid­ha­ran: I do not look any­body. For me branded mar­ket is al­ways a branded mar­ket. I am not wor­ried about oth­ers and I want to grow. We make the mar­ket big­ger and there is a share which we can al­ways take. It is es­ti­mated that, af­ter­mar­ket busi­ness is around Rs 66,000 crore, which is grow­ing at around 6-7% YoY. In this ac­ces­sory is not in­cluded, if you put all th­ese to­gether it will be closer to pos­si­bly around Rs 80,000 crore. But now each com­pany will be do­ing a busi­ness of just Rs 1000 crore to Rs 2000 crore. So, there is a huge op­por­tu­nity for growth.

Q: How is the pas­sen­ger car seg­ment grow­ing?

Mu­ralid­ha­ran: It is much more com­plex and will have more digi­ti­sa­tion. It is also likely to have elec­tronic parts which are all linked by Con­troller Area Net­work (CAN) and con­nected ve­hi­cles will be part. What I do not know is when there will be a shift to AI. Def­i­nitely, the parts life will in­crease, and digi­ti­sa­tion has a huge role. The end user will use the app and he will com­pare. There the chal­lenge will be for garages. For ex­am­ple, most of the parts will be elec­tron­ics. At LIS, we have de­vel­oped a de­vice (don­gle) which is for di­ag­nos­tics. It has its own strengths. It is for the mid­dlelevel cars. Top level cars will have their own garages and tools, so we are not com­pet­ing with them. It is an On Board Di­ag­nos­tics (OBD) tool and will be linked with in­ter­net and also via smart­phone. It will be given to the garages for ser­vic­ing. We may give it to the cus­tomers but not at the mo­ment, as the DIY is not pop­u­lar in In­dia.

Q: Can you say more about this new de­vice in terms of ser­vice?

Mu­ralid­ha­ran: We give the don­gle to each garage and in the process, we sup­ply the parts. The ap­proach for the af­ter­mar­ket so­lu­tions will be there. The car mar­ket is a so­phis­ti­cated one and we are bullish about the two-wheeler mar­ket. It is large and not ag­gre­gated. There is an op­por­tu­nity and we are grow­ing strongly. We have prod­ucts from Lu­cas TVS and In­dian Nip­pon Elec­tri­cals. We have a range of prod­ucts and we will have the rea­son­able bas­ket. Since the mar­ket is dis­in­te­grated we feel we have an enor­mous scope. The tech­nol­ogy shade is slower than the rest. But, the risk is EVs. We have prod­ucts for e-bikes and e-rick­shaws. We are into that too.

Q: Could you elab­o­rate more on the two-wheeler ser­vice seg­ment?

Mu­ralid­ha­ran: We are go­ing deeper into the mar­ket. We are in touch with a lot of me­chan­ics and train them.

Q: How do you man­age to do all un­der one roof?

Mu­ralid­ha­ran: That is the ex­per­tise that we bring to the ta­ble. We mod­ernise stores, im­prove stores and we im­prove ware­houses. Parts man­age­ment, tech­nol­ogy man­age­ment and prod­uct man­age­ment are what we bring. Our abil­ity to bring you the prod­uct tech­ni­cally cor­rect, af­ter­mar­ket so­lu­tions and we even give you the brand of your choice. We are brand neu­tral and we have al­most all the brands. Be­cause cus­tomers want choice.

Q: As an af­ter­mar­ket player, how do you take on the coun­ter­feit?

Mu­ralid­ha­ran: We have cod­ing sys­tems, bar­codes and more so­phis­ti­cated sys­tems in place. Only by ed­u­cat­ing peo­ple we can erad­i­cate coun­ter­feit.

Mu­ralid­ha­ran: We ex­port to SAARC coun­tries. We fol­low wher­ever the OEMs go. From LIS we are ex­port­ing to dif­fer­ent coun­tries wher­ever the In­dian cars go. Now the com­po­nent man­u­fac­tures have started ex­ports.

Q: How is your ex­ports busi­ness? Q: Do you have plans to ven­ture into any new ar­eas?

Mu­ralid­ha­ran: We con­tin­u­ously search for new prod­ucts and ar­eas. We have taken up dis­trib­u­tor­ship for NSK Bear­ing and we have taken up Gates In­dia prod­ucts. We are also will­ing to part­ner with any­one, who has a strong prod­uct port­fo­lio.

LIS dis­trib­utes wide range of starter mo­tors man­u­fac­tured by Lu­cas TVS

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