Suresh KV, country head, ZF India, believes in taking charge. Post introducing a culture of continuous improvement and innovation, his company has seized a sizeable share of the transmissions’ market.
by Mitalee Kurdekar
The ZF India headquarters in Chakan, Pune, bears an air of serenity about it, much like the man who runs the show there. In fact, Suresh KV, country head, ZF India, is the personification of the business he helms. Just as the German auto component giant’s Indian business has spent 30-plus years – since commencing operations in 1984 – building itself into a formidable force in the domestic market, Suresh too has let his work – since he took over in 2015 – do the talking. His unassuming manner camouflages a keen eye for detail and a passion for business, something that is reflected in his enthusiastic tone. He has ingrained the same ethos in his employees, thus ensuring that ZF steadily climbs the ranks and overtakes competition for a spot atop the business pyramid.
“If you take the case of transmissions, for a long time now, we have not been fighting the competition, but rather the in-house manufacturing units,” points out Suresh. “The Tatas, for instance, manufacture their own CV transmissions. However, for the past couple of years, we are hearing manufacturers question whether they should make transmissions, or leave it to organisations like ZF to support them, such that they can focus on the vehicle itself. And that’s a mindset change which is well and truly happening at major OEMs,” he states.
ZF is one of the leading suppliers in the CV transmissions space. Similarly, on the industrial side of things, ZF has created a niche by playing to their strengths. A case in point is their wind business, wherein they are possibly the only player in the country to have the entire manufacturing set-up at their disposal.
“Our approach to the wind segment has been holistic. We don’t just procure steel and convert it into gear boxes; we don’t just do the assembly. Instead, there’s a great deal of value addition involved,” proclaims Suresh, adding that they are also increasing their footprint in the burgeoning off highway segment. Also, while wind has done wonders for their footprint and is their biggest customer, automotive comes a close second, and they are growing at a much faster pace because of the amount of space left to cover on the automotive side of things. Another reason why wind is leading is because of the sheer size of the product, given that it is a 16-tonne transmission that goes out to multiple customers. However, the automotive products are much more complex to manufacture, with modifications required for each of the five products that are made for various clients.
As Suresh confesses, “Our focus is now on the automotive business. Globally, that is our strength, and our dream is to make in India as well as to become a major player in the automotive segment.” And their innovative approach and ability to adapt quickly are helping them go the distance.
The Journey so Far
The first change came about in 2007, when they launched their own entity in India, and began to set up their power manufacturing units. Commencing operations with truck transmissions in Pune, ZF went on to set up its chassis components business unit and product line over the next two to three years. The year 2015 saw the biggest transformation, when they consolidated their footprint into the Chakan location in Pune under ZF India.
The Pune plant now caters to the automotive segment, while the Coimbatore factory (under ZF Wind Power Coimbatore) looks after the manufacture of industrial products. The list of products manufactured by both these facilities of ZF’s wholly-owned subsidiaries includes manual truck transmissions and chassis components for trucks, clutch systems for passenger cars, transmissions and driven axles for backhoe loaders, and transmissions gearboxes for wind turbines. Additionally, the ZF Aftermarket and ZF India Technology Centre (ITC) are also a part of the 100% subsidiary.
Overall, the company runs 28 units, including factories under its six joint ventures (JVs), altogether operating from 16 locations in India. The JVs consist of ZF Hero Chassis Systems, ZF Electronics TVS (India), Somic ZF Components, Brakes India, Rane TRW Steering Systems, and TRW Sun Steering Wheels. These firms produce chassis components and axle systems for passenger cars, switches and sensors, brake components, steering components, hydraulic power racks and pinion gears, steering wheels as well as occupant safety systems like airbags and seatbelts.
Another massive change was the acquisition of TRW and de-linking with ZF Steering. “When we acquired TRW, globally, in 2015-16, it had a huge steering component to it. Due to the anti-trust law, we had to shelve the steering business that we had, which was then sold to Bosch. Post the worldwide acquisition of TRW, resulting in the de-merger from ZF Steering Gear India, we have been operating as ZF India with our steering business being run through the ZFTRW JV in Pune and Chennai,” informs Suresh.
Standing Out from the Crowd
Despite change being the only constant at ZF, it has helped the company carve a niche for itself. Ask Suresh about what their key differentiator is and he is quick to reply. “Mainly two things, technology and processes. Our products have a much higher endurance. If you go into the warranty claims; if you go into our complaints at the customer end; you will see a significant difference between what our competition faces and what we do,” he claims with pride.
With their transmissions running much longer and the reduced number of complaints that they receive, word is spreading and the sales volumes are rising. “Given the volume of transmissions in the market, even a small percentage change means an enormous change in numbers, so we are proactively preparing to service that demand. This means that besides product reliability, we also have service readiness processes in place to cater to the Indian market,” adds Suresh.
Thirdly, there is a constant engagement with customers in order to update them about the various technologies that are coming up. He explains, “For instance, rather than the customer approaching us, which is also happening, we have been approaching them to ask questions like: Given that you are moving from BS-IV to BS-VI norms; with driver comfort becoming a concern; and with GST making long-distance drives a reality; how can our products support you better. Similarly, we’re seeing that people are moving from small tonnage vehicles to heavier tonnage vehicles, and we want to work towards making products that can assist our customers, which means that such discussions are imperative.”
More importantly, the landscape in India is going through a metamorphosis. Besides the Government-induced compulsion to shift to lower emission-technologies, there is an inherent change in attitudes which is compelling OEMs to switch towards better vehicles. Manufacturers are reflecting a keen interest in improving their products, which is helping organisations such as ZF viably contribute with better products. “There are certain initiatives which the OEMs themselves are taking up to improve their vehicles and to create a USP for themselves, which means that there is a real keen interest to upgrade their vehicle to the latest technologies. Although there are certainly changes in the statutory laws, the evolution is happening more because there is a willingness and intent to evolve,” surmises Suresh.
In answer, ZF India has done innumerable things, the biggest of which has been the launch of the ZF India Technology Centre in Hyderabad. Opened in March 2017, the ITC employs 1,000-plus engineers, with an aim to take that number to at least 2,500 by 2020. That a huge figure, given that the total employee count in India stands at around 14,000. Interestingly, three-quarters of the engineers at ITC are working towards developing innovative software solutions such as those for e-mobility and automatic driving, very much in line with ZF’s digitalisation strategy.
“There was a real necessity at ZF to have this centre. While it could have been anywhere, India has a very strong need for it, given the complexity of the product lines. Thus, there was work already available, all we had to do was look for the resources. Once we had the centre in place, we had ambitious plans on how to use it. I can confidently say that we did much better than what we’d expected to do with the ITC. The number of people are increasing, the type of development we are doing is aligned with our thought processes, and the reception from internal customers has been good, which shows that there is more work coming into ITC. Last but not the least, our growth plan still continues to be very relevant,” opines Suresh. In the long run, the company has plans to develop local products (on the mechanical side) for the end-market.
Speaking of product development, Suresh has an intriguing take on how things function in India as opposed to the West. “I believe that there are certain strengths in our culture and I don’t think we should lose them. Whether one calls it jugaad or improvisation, I feel that there is some merit in our methods. Just because a European says that a task will take seven months to achieve, there is no reason to stick to that timeframe, if we can shorten it,” he suggests.
Having said that, when it comes to new product launches, lead times can be quite long. This is especially true during the initial two-three years, when around 70-75% of parts are imported. ZF as a group has commodity purchasers to procure raw material for their global plants, thus giving them a cost advantage. The lead time gap reduces as localisation takes place, albeit there is never 100% localisation, as ZF does not see the benefit in localisation of the small value parts. There is therefore always a three month lead time on their part, while customers give a forecast of up to six months. But that is not always the case.
“Today, in the commercial vehicle market, we’re not able to even forecast the next month. Yet, in an ideal scenario, I would like a forecast for 12 months for my capacity planning. The last six months will be meant for any change, while the immediate three months should be a plus/ minus of 10% and the next three months should be plus/ minus 20%. That will be an excellent model to work with,” states Suresh, who also admits that they have only recently introduced ERP at the Coimbatore plant.
Wheel of Change
On the topic of change, the implementation of the GST has led to borders not being stoppage points anymore, resulting in long distance travel, and therefore the need for efficiency of transmissions, and thereby a need for the ZF quality of transmissions. Business has since boomed, including exports, with the company almost reaching their target of €100 million worth of exports by 2017. Yet, ZF cannot keep up despite demand from export markets, since they are not even able to cater to the Indian market completely.
“There is huge amount of potential to grow in the domestic arena. ZF India should be doing more in the Indian market,” believes Suresh. Fortunately, they have gone through a stabilisation phase since 2015, and today, are at a stage where they are seeing the volumes in India picking up well. And they are well prepared for what lies ahead. With three levels of capacity expansion possible: one, in terms of land and building – where only 25-30% is currently being utilised; secondly, machinery, where optimal use is taking place and new machines are being commissioned; and finally, other resources and manpower that are based on the fluctuating demand; ZF is in a good spot.
Above all, Suresh’s mantra for continuous improvement and innovation at every level bodes well for the company. “Continuous improvement is probably a mainstay in any leading manufacturing organization, today,” he professes. “Again, change is a constant in life. Changes come about either because of problems we incur or because we are looking to improve from our last performance. At ZF, we have productivity improvement plans, cost improvements plans, and quality improvement plans. There is a proactive approach to innovating to get better results,” he emphasises.
With a comprehensive performance and a multitude of successes, ZF sure is on the right pedestal. Having taken some critical steps in the last few years, whether it was setting up the Chakan plant; launching the ITC; or ensuring that they were ready for the market from a product perspective, from a process perspective and also from a management perspective; the company is headed in the right direction.
“We have made ourselves visible in the market, but there is more to come. While we are at the right place today and fortunately the industry is also doing well, the next five years will be really interesting,” hints Suresh. And we can’t wait to see what’s in store.