Shishir Joshipura, MD & country head, SKF India, believes that Steady investments in innovation will be their prime edge.
by Mitalee Kurdekar
SKF needs no introduction. Think of bearings, and the company’s name springs quickly to mind. Such reputations are hard to build, and even harder to sustain. But the Swedish multinational has done both, managing to roll with the times, much like the products it manufactures.
Its story in India is a little different, yet SKF’s core ethos is still quite evident. What started as a trading arm (in erstwhile Calcutta) for the global business, back in 1923, has today, almost a century later, expanded to six full-fledged manufacturing facilities in Pune, Bengaluru (two plants), Mysore, Ahmedabad and Haridwar. In fact, in India, SKF functions as three different companies – SKF India, SKF Technologies (India) and Lincoln Helios (India), together operating from the aforementioned production units. The group’s manufacturing footprint has essentially expanded since the year 2010; they have invested heavily in four new state-of-the-art facilities, an R&D centre in Bengaluru and three satellite factories, all in the past seven years. These investments have been market-driven, yet ahead of their time, and the credit lies largely with the management of the company.
“Post 2010, the impetus has been very high on investment for growth. And that has aligned itself to the growth story of India. We have seen a complete change in the automotive segment and are beginning to see a change in the industrial segments, and I think that’s reflected in what we have done,” states Shishir Joshipura, MD & country head, SKF India.
Crafting innovative solutions
With their astute understanding of the Indian market, SKF has managed to amass 27% of the entire bearings market, today. Around 47% of SKF’s business comes from their automotive operations, while the rest of the 53% is divided into industrial segments such as energy, mining, earth-moving equipment, defence and so on. Each of the two businesses includes a services division, which consists of making sealing and communication systems, in addition to value additions such as improving customers’ turnaround times and bottom lines. This division also participates in cost-reduction programmes and ensuring overall efficiency of the plant.
“We know that we are the number one player by a large margin, but that doesn’t make us complacent. If we become complacent, it will not take too long for our competition to catch up with us. Hence, we are making sure that we continually add value to our customer’s operations in a manner which makes us stand out. We are not just selling a bearing or a seal or a system, instead, we are offering a complete solution,” claims Joshipura.
The focus has shifted to helping customers improve performance in whichever dimension they want, be it efficiency, reliability, predictability, cost of operations, maintainability, or any other form of value addition. “We want to put the customer at the centre of everything we do, not the product or technology, and that has been a big attitudinal shift,” adds Joshipura.
He stresses that innovation will be a major driver for growth, but it will not be imposed unless required; rather only used in constructive ways. To innovate, the company leverages on their global competencies in R&D, while also introducing product-level innovations for the local market. R&D expenses are borne centrally, and they plough back around 3% of their revenues into R&D. In this era of digitalisation, a lot of collaborative work takes place between the central teams in Gothenburg, Sweden, and the India teams (consisting of roughly 200 engineers).
“We, in India, have decided that we will become pilots for the global roll-out of some of the programmes. Technology has a big role to play here, yet we have a clear, market-driven definition of what counts as required innovation,” confesses Joshipura, stating that certain inventions need re-engineering before they can meet local market demand. For example, SKF bearings work for a million miles on trucks globally, whereas in India, the demand from manufacturers is for a mere 50,000kms. Yet, having got the same solution here, it was too expensive for the Indian market, and also the conditions of use like maintenance and fuel quality were very different. However, SKF took up the challenge, using foreign and Indian resources to develop a new product, which can improve the mileage offered from 50,000kms to 500,000kms. To avoid damaging the bearings from truckers’ frequent washing with muddy river water and such, the company made a bearing which is sealed for life, also meaning that it does not need to be greased again, hence lowering the cost of operations.
Extending their reach
The paradox is that even smaller Indian OEMs are willing to invest in SKF’s high-end technology, today. “SMEs are a very important part of our economy, and they want partners who can help them truly better their performance level and compete, perhaps even globally. We recognised this movement of SMEs about three years ago, and have set up a distribution network of 2,500 retailers in smaller cities and distant towns to meet their needs,” Joshipura points out with apparent pride.
Such strategic moves have assisted SKF to steadily widen their user base; SKF India registered a growth rate of 8.9% in sales in Q3 of 2016-17. Also, exports to neighbouring Asia Pacific countries have accounted for 8-8.5% of total sales. While the automotive business has been fairly well-established, there are newer avenues constantly emerging on the industrial side of things.
“The infrastructure push given to railways is complementing the growth of the bearings industry. With dedicated freight corridors and high-speed trains, this segment has become a very exciting business from an investment perspective. On the energy side, there is a Government push on clean energy, which resonates with investments in the grid segment and that is another big opportunity for us. For example, we are investing in technology to improve the safety and reliability of these components,” says Lokesh Saxena, VP, industrial business and services, SKF India.
In keeping with these growing requirements, SKF Technologies (India) launched the state-of-the-art Ahmedabad facility and began production in 2010. The Leadership in Energy & Environmental Design (LEED) Gold-certified plant is spread over 33 acres of land and caters to segments such as power generation, renewable energy, construction, mining, railways and material handling, making a wide range of medium and large bearings for the same.
“We invested in this facility primarily to cater to one of our customer’s renewable energy needs. But the markets plummeted soon after, and we were left with this massive investment that we had to turn around. We needed to re-engineer this facility’s operations to produce for other upcoming business segments such as railways, mining, construction, power and more, in addition to energy,” states Ajay Naik, factory manager, Ahmedabad plant, SKF Technologies (India).
Quality without compromise
The Ahmedabad plant today houses six assembly lines, producing cylindrical roller bearings (CRB) for applications like railway and mining, ranging from 400mm to 1,500mm in diameter; taper roller bearings (TRB) for off-highway segments in similar sizes of 400mm to 1,500mm; spherical roller bearings or self-alignment bearings, which are also in the same range and used for mining, cement, off-highway, steel mills, etc; and tapered roller bearing units (TBU), which are specific to automobiles and around 320mm in size. Besides these, they make slewing bearings for wind energy, defence and earth-moving equipment applications, ranging from 1000mm to 3,200mm, which is the largest diameter they produce. The manufacturing process is precise and accurate. Forged turn rings go through SKF’s in-house heat treatment, post which they undergo rough and fine grinding, assembly and final packaging.
Since it works across varied business segments, SKF uses a demand forecasting system to predict product demand three months ahead, while their supply chain and operational plan lets them calculate capacity requirements for around 18 months at a time. SKF is structured in a way that the purchase organisation is global, which gives them maximum leverage, both in terms of supply chain performance and cost-competitiveness. However, the supply chain management is carried out both globally and locally. in fact, around 85% of raw material used for bearing production in India is sourced from within India. They buy from steel mills in Maharashtra, Gujarat or Karnataka, all located close to their plant locations. Haridwar is the only anomaly, with no local supply chain for that location. When asked if the protective duties on steel imports has affected them, Joshipura suggests that it has not had a huge impact, but only forced them to change their supply chain partners.
“SKF has to import certain grades of steel that are unavailable in India. Secondly, in one or two instances, there have been virtual monopolies by local companies. Thirdly, in some cases, consistency and performance is lacking; and that’s where the game needs to change. We are constantly working with Indian suppliers to help them change their level of quality performance, because, even though the component I make has a very small cost, if that fails, there is a risk to performance. We pride ourselves on the fact that bearing number one and one million will be exactly of the same quality,” says Joshipura.
Another issue facing the company has been the sale of counterfeit products in India. Joshipura agrees that it’s a menace on multiple levels, firstly because customers get cheated and performance is at stake when a counterfeit product fails; and also because it can damage a reputed brand as customers are unknowingly buying counterfeit products; and finally since it causes a huge loss to the national exchequer. SKF has taken up a very active role in educating customers and consumers about this, via information provided on a dedicated website; and also works with law enforcement agencies to nab unscrupulous manufacturers.
Leading from the front
In such business circumstances, it is not easy to have a hands on approach to leadership. But Joshipura has a different perspective. Despite his hectic schedule, he makes it a point to meet every single one of his 3,000-odd employees, every year. It is no wonder then that human resources is one of the company’s strong suits. Leadership development policies at SKF seem to be working wonders for them, with 70% of their top management emerging from within the organisation, for three years in a row.
Besides its people, the company cares for the environment, too; and works towards a goal of reducing its carbon footprint year on year, irrespective of production figures. They drive energy-efficiency in operations and are now embarking on a programme to derive energy only from sustainable sources. For example, the Bengaluru factory relies on its hydro-electric plant for nine months in the year for its energy requirements. The Pune and Bengaluru plants generate a large amount of energy through roof-top solar panels for their plant operations. Another way in which they are giving back is through their CSR (Corporate Social Responsibility) initiative called YES (Youth Empowerment at SKF), a flagship vocational skill development programme that was set up in 2013 for unprivileged, promising youth. It currently operates out of two centres in Pune and Bengaluru, with plans to set up five more centres in the next five years, preparing 5,000 skilled youth for jobs in the automotive services market.
Joshipura speaks as passionately about these initiatives as he does about their core business, and it becomes easy to see why the company is on a steady growth trajectory. On that front, he welcomes the support from the Government’s new policies, such as GST (Goods & Services Tax). “There is a big change, underway. Infrastructure – in terms of the road network – is improving, leading to better connectivity; our transport networks are getting smarter with advanced technology; and finally, the tax law itself – GST – will be a big game changer. Today, we have our stocks at 14 locations, but we plan to bring that down to just four, post GST. By improving this, we actually improve our service levels and serve customers faster. I think it is just amazing what GST is going to do,” he pronounces.
And things are certainly looking rosy for SKF. “The economy is turning, plus the strategy that we are putting into place is going to push us to a stage where we would start adding capacities. As a matter of fact, we are already in that process; there are product lines where we are increasing capacities as I speak, and some more are in the pipeline. Over the next three years, we will probably more than double our investment in reality,” Joshipura finishes on a high note.