The ANAND Group is one of the largest auto component conglomerates in the country which boasts of time-tested partnerships with global leaders in the field. Mr. Rajeev Gera, Sr. Vice President – Group Head, Business Development, tell us how ANAND Group has leveraged its access to global technology through its partners to be future-ready for BS-VI.
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Market Impact
As we know, ‘change’ is the only constant. We have new regulations and new changes and as a component industry, it teaches us how to handle changes.
At ANAND Group, three of our companies are directly and majorly affected by the BS-VI norms.
The first one is MAHLE ANAND Filter Systems. Since we are associated with MAHLE who are a global leader, the technology for BS-VI was available to us since 2015. Our products have been homologated and implementation will start from October this year.
The second is Faurecia who are into emission systems. Again, Faurecia being a global leader, the technology was available and we have adopted the same. Our samples have been tested by OEMs and we are waiting for SoP.
Anchemco ANAND is the third one that can contribute directly to BS-VI with its range of AdBlue solutions which majority of the OEMs are already using.
Cost implications
I have a slightly different opinion here and don’t think the vehicle cost should go up substantially due to BS-VI introduction. Raw material commodities including steel, copper, aluminium and rubber are actually softening to the tune of five to 10 per cent and in some cases even beyond 10 per cent. This would help OEMs absorb some part of the cost increase.
Also, given the condition the entire industry is at present, I don’t think the OEMs would pass the entire incremental cost of BS-VI to the consumer.
When it comes to M&HCV trucks, the cost increase will be high. But here again, the axle load increase that happened last year has given fleet owners a benefit of around 10 to 12 per cent on their transport costs which will partially negate the price increase.
Challenges
As indicated earlier, the major challenge or learning would be change management. As a component industry, we are learning how to adapt to the changes in a perfect manner and in quick time.
On the aftermarket side, the availability of BS-IV parts post BS-VI implementation will be a challenge. We will have to produce BS-VI parts for the OEMs and BS-IV parts for the aftermarket which will pose a challenge linked to minimum product quantity and cost.
On the service side, the unorganized sector would face a major challenge as they would take time to upgrade to the change. As a result, we will see consumers placing more faith on the OEM network rather than road-side aftermarket dealers and mechanics.
Opportunities
A lot of co-development has started happening between component makers and the OEMs. OEMs are working with us to co-create and co-develop products to meet the new norms.
The BS-VI transition is teaching us to be ‘first-time-right’. Since the opportunity window is so small, you have no chance to fail; this is a major learning for component manufacturers. One failure and you are out of the business.
Another big opportunity is the fact that OEMs and component manufacturers now have huge scope to export to developed markets.
Outlook
We expect the current industry slowdown to continue until H1 of 2019. As a Group we do not see any major improvement until Aug-Sept next year.
With regard to the pre-buy, I feel consumers, especially in passenger cars, have become much more learned and they will wait for BS-VI vehicles rather than go in for the obsolete BS-IV technology for which future is uncertain.
At ANAND Group, we would definitely like to be doing better than where we are at the moment. However, new acquisitions, businesses and products are helping us stay afloat and are reflecting in strong growth in some segments. For instance, in the two-wheeler segment we are growing by a high single digit per cent at a time when the industry is badly affected.