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Auto-component company Sona Comstar, which has a market cap of over Rs 25,000 crore, reported a quarterly profit of Rs 93 crore, showing a growth of 5 percent compared to the second quarter last year. For the first half of the year, its revenue grew by 15 percent to Rs 1,247 crore.
The company specialises in making precision forged gears for the global markets and also designs mission-critical automotive systems and components to original-equipment manufacturers (OEMs).
“Cross-pollination of technology between the West and the and the Far East in India is essential to make sure the supply chain is robust enough for volumes that we need to reach,” says Sunjay Kapur, chairman of the Gurugram-headquartered global supplier with nine manufacturing and assembly facilities across India, the US, Mexico, and China.
In an interview, Kapur, who is also the president of Automotive Component Manufacturers Association of India (ACMA), discusses how the rise of electric vehicles is transforming manufacturing, what his strategy is for the Sona Comstar group and why “light-weighting” will continue to be a factor for the mobility industry. Edited excerpts:
Given that you’re a build-to-design component maker, what new trends are you seeing courtesy your OEM-partners?
If you talk about us in specific, in terms of departure, we make starter motors and that business will transform to traction motors very quickly. Because starter motors will not exist in a battery electric vehicle (BEV). Starter motors is basically you press a button to switch the car on. While a traction motor is really a motor that goes into an electric vehicle, and drives the vehicle. It is its heart. We also do a lot of two- and three-wheeler electric motors.
In our gear business or our forging business, we’ve really gone up the value chain from a pure play-gear manufacturer to a differential manufacturer. We’ve taken our gear, which is the heart of the technology, and built a differential around it, as opposed to supplying the gear to a differential manufacturer. We’re going out and buying the casting, machining it, putting the gears in, putting a final drive and then shipping it out as a differential to both ICE (internal combustion engines) as well as electric vehicles. Now, the torque requirements change with the electric vehicle and ICE; however, the differential itself exists, because the function of differentials exists in both the ICE and an electric vehicle.
I would go back to the ’90s, when Mahindra gave the auto-component industry an opportunity to design. When the Scorpio was built, we were all put into a phase or into a programme where we made or built our own designs for the Mahindra Scorpio. That’s when we moved from the build-to-design industry. And that’s really what’s helped us remain, sort of, ahead of the curve in terms of design, R&D and all the investments we made into it.
What are the growth areas for auto-component makers in the EV space?
I’d say connected autonomous telematics, software opportunities, radars, sensors, opportunities to play in the space where safety is going to become more and more paramount as we go forward.
So, how will manufacturing change? I think, 70 percent of vehicles will remain pretty much the same. Lighting system or an HVAC system will pretty much remain the same, but there are some components that tie into the end output which might change, because the torque in an electric vehicle is much more than the torque in a regular vehicle. So, the drive-train will change.
Where lies the big technology shift, as your manufacturing goes for EV platforms?
From our perspective, the torque changes in EVs is a big change. We have a tag line, “more torque per gram”, which is means a greater need of force per gram of steel. So, how do we continuously reduce the weight and yet build a stronger product. That’s really the key, because in an electric vehicle, you want to keep continuously reducing the weight. Light-weighting is not unique. Even from a fuel-saving perspective, light-weighting will continue. Some of the vehicles we’re building are just phenomenal in terms of the torque and the speed that they will have.
Will ICE vehicles continue to exist or become the dinosaurs of the auto industry?
Nowadays, the number of young people applying for driving licences is reducing. When I turned 16 or 17, the most exciting thing for me was getting a driver’s licence. Today, it’s not the case. They are not actively pursuing a driver’s licence like we were. I can’t say what kind of vehicles will exist in the future, but the way I see it, I feel electrification will happen, connectivity will happen, the vehicle will have many more attributes in terms of connectivity, telematics and autonomy than it has today.
What is your big challenge today?
Supply chain is still a challenge. I would also say semiconductor chips, though most of it has been sorted out (from buyers of 7 percent semiconductor chips to 20 percent now), but until more capacity…comes into the picture, we will face some challenges. And, again, the number of semiconductor chips used in a vehicle is going to continuously increase.
Right now, how much revenue comes from EV products and what is the expected growth?
Around 20-25 percent of our revenue comes from EVs, according to our order book, and is going to grow to almost 70 percent over the next few years. From our revenue perspective, that’s very clearly defined.
Given India is still very small in terms of true EV penetration, how strong is your focus for cutting-edge products in this market?
We supply to everybody: to EVs and to ICE vehicles, and the reason our growth is in EV is because the EV platforms are increasing.
We will continue to supply to the customers around the world because for a passenger car market of 4 million (India), it’s not where we want to play alone. We want to play in the 20 million unit or 21 million unit markets in the United States and China, to see real growth and real volumes that really justifies all our investments.
So, if I make investments in EV, I need to be supplying to the global industry, because our volumes won’t justify my investments in India. So, our business would pretty much remain. It’s a 25-25-25-25 game for us now. So, 25 percent each in India, from the US, Europe and China. That is really going to be the ideal mix for us, and I would say that will remain so over the next many years.
Are there critical areas that need to be addressed in the ecosystem? 
Keeping up with technology through the tier-II and -III supply chain is going to have to be addressed very quickly. In fact, we’re very actively working with tier-II suppliers, to introduce them to technologies and technology partnerships, much like what we had in the tier-I supply chain when we started our businesses. We’ve taken delegations offshore to showcase the kinds of technologies that exist.
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