BMGI presents future roadmap for Indian Automotive Industry becoming a global hub

As the key knowledge partner for 2nd India Automotive Passenger Vehicle Summit 2012, held in The Westin, Pune on the 26th & 27th July, Breakthrough Management Group India Pvt. Ltd (BMGI) presented the future roadmap for the Indian Passenger Vehicle industry becoming a global hub. The event was organized by Shanghai based Lnoppen which facilitates business through events and market research across Asia & Europe. The event comprised thought leaders from across the world and from the passenger vehicle industry with senior management representations from OEMs, Tier 1 & Tier 2 suppliers that included ARAI, Fiat India Automobiles Limited, FORCE Motors Limited, General Motors India, Hodek Vibration Technologies Private Limited, Mahindra and Mahindra Limited, Mercedes Benz, Premier Limited, Shell India, Sonalika Group, Tata Motors Limited, Tulsi Castings and Machining Limited to name a few. In a brief presentation, the Chairman for the event Mr Naresh Raisinghani, CEO and Executive Director, BMGI, outlined the evolution of the Indian Passenger Vehicle (PV) industry right from classic models in the 1950s, to the focus on scooters in the next 3 decades, to de-licensing in 1991 leading to global OEMs entering India, to the current decade where India is recognized as a global auto hub as several top players have already entered the country. He added that India being the 5th largest hub today is also a strong contender for becoming the 2nd largest global hub for passenger vehicles.

Mr Naresh Raisinghani, CEO & Executive Director, BMGI

There exist over 1 billion passenger cars on the roads worldwide where the emerging markets still have the potential to absorb a lot more, Mr Raisinghani highlighted. He elaborated on the key enablers of the Indian PV industry that include car density, disposable income, rising aspirations of Indians, capability to produce more, vehicle financing, rising interest in electric vehicles amongst both OEMs and consumers, aggressive Auto Mission Plan to name a few. Mr Raisinghani signed off outlining the key challenges the PV industry faces today which includes fuel price changes, technological challenges like green fuel, an interesting challenge of low cost small cars and conducive locales for manufacturing (highlighting the constant political disruptions in the east and recent Maruti incident). In addition to these, the fundamental challenge, BMGIs CEO added, is the ability to be globally competitive on cost and productivity given the huge auto industry and over USD 1 trillion autocomponents industry coupled with the large number of players and additional investments creating significant pressures on profitability in the short term. Why is a conducive locale important for an automobile manufacturer? Mr KT Vyas, Officer on Special Duty, Industry Extension Bureau (iNDEXTb), Government of Gujarat seemed to answer this question raised by the Chairman of the event In his presentation, Opportunities in the Manufacturing Sector in Gujarat, he shared that India is a preferred investment destination today owing to the fact that more than 60% population is below forty years of age providing great potential for experienced as well as a huge English speaking manpower. Mr Vyas labelled the state as a strategic location for trade owing to several factors such as industrial peace, minimal labour unrest of 0.5% and presence of large number of SEZs. He gave the example of Tata Motors who shifted from Bengal to Gujarat and were ready for production in a span of 15 months that fuelled the rapidly growing interest to set up automobile facilities in the land of Gandhi. He remarked one can produce anything but land

and shared several facts to market Gujarat as a favourable investment destination that include booking of more than 15% of vehicles of new Maruti model from the state, massive optical fibre network that is highest in Asia, internet connectivity to all panchayats, connectivity of all major cities to ports and availability of skill up gradation models run by anchor institutes such as Tata Motors and Essar. Mr Vyas shared his Vision 2017 for Gujarat where the education sector will be very active providing adequate manpower. On a very interesting topic close to the heart of many automobile manufacturers, Mr M R Saraf, Deputy Director, Structural Dynamics Laboratory, Automotive Research Association of India (ARAI) gave a detailed analysis of Indian Driving Pattern and Approach for Developing Vehicle for Indian Condition. He shared the findings of a survey done by ARAI on the driving habits across India to understand customer requirements. Some of the observations shared included different vehicle requirements in different regions and driving patterns changing every 5 years. In response to a delegate query related to ARAIs influence on the government to improve the roads, Mr Saraf stated that the primary goal was to design vehicles as per the existing infrastructure and driving habits and not the other way round. Mr Akhil Jha, Vice President, Technical, Lubricant business, Shell India shared insights on the latest technological developments in the field of lubrications in his presentation Lubricant Projects, Technology and Application. The major technological challenges facing OEMs today are fuel economy, emission reduction and making engines tolerant for alternate fuels. Among the fluids, he added, the trend today is to move towards low viscosity oils but cautioned that this leads to compromising on lubrication. Mr Harnish Raja, Joint Managing Director, Hodek Vibration gave an overview on torsional vibration on engines and elaborated on value addition by modifying dampener designs that are custom-built. Additionally, Mr Shrinivas Guddad, Head Marketing and Business Development, Tulsi Castings and Machining Ltd. corroborated the issue raised by Mr Raisinghani earlier regarding lots of capacity addition being a huge challenge. He also focussed on a high growth trajectory with a state of the art plant and inspection facilities of export quality. In a feature-rich presentation, Mr Nirmalya Banerjee, Business Head, BMGI, mapped the Pillars for Future Growth in Indian Automotive Industry. Steady growth of demand, sharp growth in exports, growing focus on supply chain, direction towards green technology to name a few are key trends showcasing the current status of Indian Automotive Industry, he stated. He stressed that the key paradigms of growth will be in enhancing internal capability and leveraging external opportunity. Mr Banerjee elaborated the key strategies for enhancing internal capability that include Design for Six Sigma (DFSS) where a structured process helps in reducing time for product launch, enhancing speed of production, creating seamless flow in supply chain and enhancing capability six sigma way. Further, he talked about leveraging external opportunity through the strategies of rapid innovation and quick and efficient capacity addition. In response to a delegates query on most product launches being a failure for auto companies, the business head from BMGI highlighted that most of them follow a conventional approach having a 14% success rate as against a DFSS approach where this rate is 45%. What is the impact of rising fuel prices on the Automotive Industry? What could be done about it? This query was answered by Mr Jayanta Deb, Vice President (Engineering & Design), Fiat India Automobiles Ltd. Discussing the way forward to counter the recent hike in fuel prices, he mentioned about the high court ruling in Gujarat where

Mr Jayanta Deb, Vice President (Engg & Design), Fiat India

cars are required to convert to CNG/LPG. Questioning the BS V legislation in India, he cautioned that BS IV legislation itself will be implemented in only 50 cities by 2015. Even though research says that BS V can be achieved with the current sulphur content, there is danger of diesel particulate filter getting blocked with the kind of sulphur in India that could lead to new fuel efficiency ratings introduced in the country, the VP of Fiat added. Voicing his opinions on the upcoming technology trends in India, Mr Deb mentioned that Start/Stop electrical technology in India will show growth in the short term and there is tremendous scope for hybrid vehicles in the long term. Anticipating evolution of alternative fuels, hydrogen cells will dominate the period from 2030-2050, he predicted. Some of the other interesting parts of Mr Debs presentation included recent trend of huge investments in new designs due to extreme thoroughness requirements of calibration and validation, increasing penetration of gasoline direct injection engines, evolution of electric power steering in the near future with options for city and highway mode driving, inability of the auto companies to improve traffic management and rising industry concerns on fuel quality at retail outlets as adulteration rises with fuel price rise. Day 1 concluded with a panel discussion on Designing and Maintaining Transformational Supply Chain that included Mr Jayanta Deb, Mr A T Jain, Head, Quality Assurance, Tata Motors Ltd. and Mr Sameer Jindal from General Motors India. Mr Jain drew attention towards the fact that vendors are an integral part of OEMs and should be involved from the Panel Discussion moderated by Mr Raisinghani beginning of the procurement planning process which can resolve most of the sourcing problems. In response to a delegate query on the future of auto industry in the coming 5 years, Mr Deb drew a comparison with the China market where demand was for bigger cars whereas India hosted a huge market for both sizes thus substantiating the point made by the CEO of BMGI earlier. Day 2 began with a speech by Mr Ashwin Jacob, Director, Automotive Head, Management Consulting, KPMG Advisory Services Pvt. Ltd. who gave on overview on the opportunities and challenges faced by Indias Automotive Sector reinforcing the opening address by the events chairman Mr Naresh Raisinghani on Day 1. He gave the time line for industry landscape and evolution right from heavy regulation to Glocalization describing the latter as next stage of maturity. He predicted the Indian market to be the 3rd or 4th largest by 2018-2020 and drew attention towards the evolution by citing trends such as growing maturity of Indian consumer, opening up of Tier II and Tier III markets especially rural markets for small and compact vehicles as well as 2-wheelers, passengers looking for entertainment in vehicles, focus on total cost of ownership to name a few. The next speaker, Mr Debashis Mitra, Director, Sales & Marketing Passenger Cars, Mercedes Benz, India gave an overview on Customization for the Indian Market to fit the Local Demands. His presentation primarily revolved around 3 angles namely emerging markets having their own complexities and variances, Indian consumer behaviour different from their western counterparts and rapidly changing retail environment. INDIA is a country of AND, stated Mr Mitra describing the Indian consumer as a very difficult proposition. He predicted that by 2020, no automobile player can afford to not be in India. The biggest challenges facing us today is ability to adapt quickly to global technologies (e.g. left hand drive and Euro V norms as against current right hand drive and Euro IV norms), having cars suitable for different environmental conditions and also about Indian consumers being accustomed to BEING DRIVEN and hence bothered more about the rear part rather than the front portion of the car. Indian roads test Man and Machine and the consumers are used to music on the roads calling for heavy duty horns, said Mr Mitra on a lighter note.

The Mercedes Benz director shared how his organization is redefining the Indian auto sector where the marketing approach focuses on penetration by addressing complex media, taking special initiatives for customer connect and not replicating global practices since Indian consumers have a unique taste. He also touched upon the retail finance in the sector where there is a rising need of hybrid solution between the banks and OEMs own captive finances since the concept of leasing a car is nascent in India and hence educating customers becomes the key. A panel discussion then followed on the next potential automotive hub in India moderated by Mr Nirmalya Banerjee from BMGI and included panellists Mr KT Vyas, Mr Debashis Mitra and Mr Akshay Sangwan, Corporate Head, Strategy, Sonalika Group. Mr Banerjee initiated the discussion questioning the panellists as to which location in the country will be the emerging hub. Mr Mitra challenged the concept and said that a country like India cannot be restricted to three hubs but require many others which will not only change the face of the state but provide several other opportunities. Mr Vyas responded by stating that a judicious mix of being close to raw material production and market should suffice with proper role played by the State government. Mr Sangwan pointed out that the location can depend upon gaining larger market share or setting up a hub near a port in case of an export strategy. Mr Akshay Sangwan presented his views on strategies that go behind Global Sourcing for Cost Control. Although describing the risks of global sourcing in great detail, he went on to paint an optimistic scenario for the same by mentioning rewards that include lower component cost, better quality, innovation from emerging markets to name a few. Mr Tara S. Ganguli, CEO, Tara International gave a succinct presentation on Electrical Vehicles for Land, Sea and Air. He predicted that electric vehicles will constitute 25-30% of automobile population within 10 years reinforcing the view made by the events chairman Mr Raisinghani on Day 1. The reason behind growth of electric vehicles market is oil fluctuations and also the fact that they pose negligible problems compared to conventional IC engines, he stated. The summit closed with a panel discussion on Shaping the Future of the Automotive Industry in India moderated by the CEO and Executive Director of BMGI, Mr Raisinghani with panellists Mr Sangwan, Mr Ganguli and Mr Dinesh Kulkarni, Head Projects, M/HCV, Mahindra and Mahindra. The discussion was centred on topics such as emergence of electric vehicles, design shift towards composite materials leading to potential disruptions in the conventional supply chain, OEMs strategy to continue their focus on expansion and concluded with the group concurring on cost reduction and innovation being two sides of the same coin. For More Information, Contact: Business Division Vishnupriya Sharma Phone : +91 22 4002 0045 Email : press@bmgindia.com Corporate Office Divesh Sawhney Phone : +91 22 4002 0045 Email : press@bmgindia.com

About BMGI Breakthrough Management Group International (BMGI), a global consulting firm with a strong focus on delivering results, partners with organizations in various stages of their business life cycle to transform their business performance. BMGI is recognized as the world leader in harnessing the power of cutting edge techniques in the area of Innovation, Strategy, Problem Solving and Business Transformation for achieving tangible business results. BMGI enables businesses drive growth and improve profitability. Headquartered in the US, BMGI has offices in 13 countries around the globe. BMGI has delivered cumulative benefits to its clients worth several billion dollars with an ROI of 5:1 to 20:1. In India, BMGI is located in Mumbai. Our clients are leading Fortune 1000 Global companies and leading Indian companies from diverse industries such as financial services, IT/ITES, airlines, chemicals, FMCG, discrete manufacturing, telecommunications, petrochemical, textiles, biotechnology, healthcare & energy. Some of our global clients include Hitachi, Siemens, Philips, Unilever, DeBeers, Avis Budget Group, TNT Express, and General Dynamics. Indian clients amongst others include Asian Paints, Apollo Tyres, Glaxo, HUL, Kraft, ITC, Reliance, L&T, Volkswagen, SKF, Sudarshan Chemicals, Diamler Benz and Yes Bank.