Automotive Electronics To Account For 40% Of Total Vehicle Costs: Jayant Davar, Co Chairman & MD, Sandhar Technologies
Being quite upbeat about the prospects of automotive electronics in India, Jayant Davar, Co-Chairman and Managing Director of Sandhar Technologies, in an interview with BW Businessworld said nearly 40 per cent of the vehicle costs will be derived from automotive electronics, which is a massive jump from 10 per cent currently. Below are the edited excerpts:
Sandhar is one of the few auto component players in India which is into multiple offerings. Which one gives you the maximum business and would you be interested in getting into any new product lines?
Well, there are some product lines where we have attained market leadership completely. We perhaps own a large chunk of the Indian market in segments like locks, mirrors, aluminium spools, etc. There are some businesses which started out as a support group of components like plastics, zinc, aluminium, etc. to support our own front end product lines and later broke out into individual profit centres. That’s like strengthening the foundations of the company and that’s the reason for these to exist and survive.
There are certain other product lines where we entered because we thought they have a much higher growth potential going forward. For example- the cabins that we are manufacturing for the construction equipment like backhoe loaders, excavators, etc., are doing brisk business. We believe the construction equipment market is going to grow at a much faster pace than before.
If you talk about India specifically, the ones which are mandated by the government, will come in sooner and faster. For example, there are opportunities with Anti-lock Braking System (ABS), Rear Parking Sensors, or the changes that are happening within BS-VI emission norms.
How big are you betting on automotive electronics? Will you be investing your resources majorly in this segment?
The Indian auto industry will be based on certain demand factors in the future. The changes that we believe we are going to see in the next five years are the ones we haven’t seen in 100 years. This could be from the perspective of shared mobility, electric vehicles, autonomous vehicles, and on the basis of what is going to happen in the powertrain itself. With the new trends, the transportation is going to change dramatically in the next few years. And it is important for us to look towards all of those aspects. With all these happening, automotive electronics will play a larger role.
Some people have even said, and I also strongly feel, that the cost of an automobile will carry almost 40 per cent value in terms of electronics compared to a level of less than 10 per cent today. In the automotive electronics space, we would like to foray into parking sensors, USD chargers, smart helmets with embedded electronics, smart locking system, cameras, etc. We are quite confident of enhancing our revenue mix from this vertical from less than 2 per cent now to anywhere between 30-45 per cent in the next 4-5 years.
As you know, there have been quite a few rumblings in the Indian automotive industry like the electric vehicle push by the government. Is it a matter of concern for you?
Thankfully, we are not into the production of powertrains and none of our existing businesses is impacted by this change towards green mobility. On the contrary, we find these changing times as an opportunity to enter into areas that will give us an upside.
To put it the other way, there will be incremental changes in the mechanical portions of what we do. For example, our locks will continue to be made from raw materials such as zinc, aluminium, plastic, brass, springs, etc. We may have to add an electrical chip to the lock which is an additional component. Initially, we might look at importing some of them.
Subsequently, we will set up our own assembly lines to manufacture these print circuit boards. However, for certain components like automotive electronics, we have to look at a fresh way on how to recalibrate our plants to include them within our product range.
What kind of investments have you made for ramping up your operations?
In 2013, we had earmarked an outlay of Rs 5,000 million that will be spent over the next 5 years. From a single product (muffler parts) to a single two-wheeler firm (Hero Honda) three decades back, we now have 21 product lines sourced by nearly 80 OEMs of various segments. At present, we have 32 plants right now with eight additional facilities at different levels of commissioning. There are 40 installations (manufacturing units) per se.
