Mr. Santhanam had the vision to go beyond manufacture and marketing, and was a pioneer in vehicle financing and insurance, and in the process, Ashok Leyland and his organizations had even more ways to add value to the customers. Today, it is well recognized that it is the tail wind of vehicle financing that leads to vehicle sales. Mr. Santhanam could foresee this and set up a vehicle financing company in as early as 1954. Similarly, the insurance business in India which is yet to enter a phase of growth commensurate with its potential, and the visionary thought of it many decades ago.
Mr. Santhanam practiced a simple, honest and straight forward brand of customer orientation which might not have had the frills and phrases of the business school teachings of today, but nonetheless effective. He embodied the celebrated values that the TVS Group has stood for since the time of running buses which became time keepers to the people of Madurai with their punctuality. In every way, he exuded what TVS has stood for: Trust, Value and Service. Clearly, his principled attitude of delivering maximum value to customer and seeking success through customer service begot trust.
One could discern a sharp business brain that recognized business opportunities in multiple modes of value addition that made the TVS Group a virtual one-stop shop for the customer. Business success followed. After all, he had an entrepreneurial outlook in his DNA, based on fair practices.
As a human being, his endearing quality was his simplicity. Continuing success only enhanced his humility. Very down to earth, he had his ear to the ground and , I recall, would call up Ashok Leyland’s marketing people at all levels and, with no discomfort on either side, to enquire about trends in the market, to detect the straws in the wind. Therefore, the basic simplicity of the man co-existed with and in fact aided his evolved view of issues.
Mr. Santhanam had a holistic view of business, customer and life itself. It was, therefore, natural that he had the mind space and the bandwidth to espouse many causes and interests. Many charitable organizations in the city and elsewhere have been beneficiaries of his munificence. In fact, the companies of the TVS Group have taken this tradition forward with great distinction.
Mr. Santhanam brought to bear on the industry he knew so well his unique insights to conceptualise many support systems that together aimed to create an efficient transport system. The transport system of a country is a good measure of the efficiency of its economic activity. Ahead of his times, he was an ardent advocate of investments in good roads and sought to realize his vision through quiet advocacy.
The similarities in the themes of his various addresses and the contemporary government policies in respect of roads and transport regulations could not have been all a coincidence. Given the role that the Indian Road Transport Development Association (IRTDA) has played in the evolution of this country’s surface transport sector, not surprisingly, Mr. Santhanam saw in the leadership of this organization a platform to extend his holistic plans for the sector.
It is so very appropriate that Mr. Santhanam, who dreamt of Chennai becoming the Detroit of this country, became the first Indian to be elected Chairman of IRTDA, South.
The Indian auto industry is in a phase of retardation, following six years of hectic growth. Cyclicality is integral to this industry. Learning from the past, the industry is coping with the current slowdown, knowing it to be temporary, by deferring and fine-tuning investments and by cutting costs and enhancing efficiencies. Periods such as this also offer opportunities for introspection and for taking stock, for corrective actions, so that when the upturn comes, it is ready to pick up speed.
While no one is willing to make definitive predictions of when the revival would happen, there is no denying the opportunities that open up for the Indian auto industry. India’s competitiveness is based on inherent entrepreneurial abilities, its human capital notable for skills and innovativeness, the India cost advantages and the relatively recent focus on attaining global quality levels.
Mr. Santhanam was quick to recognize this formula and it is no wonder that the TVS Group companies have dominated the Deming Award winners from India. Clearly, when global demand begins to return, cost competitive products will be at the vanguard. That is an opportunity for India and its auto industry, both the vehicle manufacturers and the auto component sector.
Already the Indian automotive industry, through impressive growth since India’s economic liberalization, accounts for direct and indirect employment to over 13 million people and contributes to 17% of indirect tax revenue. Vehicle production almost doubled in four years to over 11 million in 2006-07. Volumes since then have stagnated, but general consensus is that this slowdown is temporary and should in no way alter the direction of growth.
It is pertinent to remember that a country that is home to 1/6th of humanity still accounts for less than 2.5% of the world production of passenger and commercial vehicles. For an indication of the future volumes, trends in developed and developing countries, rather than India’s past statistics, would be a more valid base. That is because India has clearly entered a new trajectory of economic growth and is very close to the point of inflection for many products, based on per capita purchasing power and disposable income.
For instance, even after discounting the share of exports, China’s production volume of 17 million motor vehicles is a better indication of India’s potential than her own current annual volume of less than half that number.
In this context, the projections of the Union Ministry of Heavy Industries become credible. By 2015, Indian car volumes are slated to cross the 3-million mark and India’s share of world auto component trade has the potential to more than double, from the current 0.9%. The current slowdown may force a correction in the time lines, but the Government’s projections for 2016 forecast the country’s automotive sector revenue at $ 145 billion, accounting for 10% of India’s GDP, in the process creating 25 million incremental jobs. There is also the welcome multiplier effect in that, for every job created directly by the automotive industry, a further seven are created indirectly in the economy at large.
The growth in demand, based on population, economic activities and purchasing power, will be met by creating capacities through investments. But, how prepared are we as road users, as manufacturers and as a nation, to cope with such an explosion of wheels and motorists on our roads?
I want to share with you a few challenges as I see them, and I am fairly confident that Mr. Santhanam wo
uld have concurred.
Among the many challenges of this volume explosion, I would like to flag off just two that are internal to the business organizations. They are reaching global competitiveness and meeting the manpower challenges.
Competitiveness through innovation
With efficiency improvements in internal processes and rationalization of tax structure, China can manufacture a car at a cost 23% lower than in India – a significant portion of the handicap is on account of higher taxes in India and their domino effect. India’s ranking in global competitiveness surveys have been average, with Singapore and China scoring much better on attractiveness for manufacturing. Industry has to continue with its advocacy with the Government, for a level playing ground in terms of costs. There is also the unattended issue of labour reforms. Beyond that, organizations have the unfinished task of improving labour productivity.
The task does not end there. For a while, we have been riding on the relative cost advantage to enter hitherto untapped markets. However, the cost advantage can only be an entry strategy because it can be easily and quickly matched and surpassed. Continued success calls for more than mere cost efficiency. The power of ideas and innovation are what will help Indian powerhouses to realize their global ambitions. The success of the Japanese auto majors in capturing the American car market is a celebrated case study of winning markets through global competitiveness. What makes the difference can emerge from simple customer insight to a technological breakthrough.
A recent Indian example is the Nano, touted as the “world’s cheapest car”. The $2,000 car is not only a triumph of frugal engineering but a triumph of all that goes into creating a winner.
The task of innovation has to be tackled at two levels: at industry level, with the participation of the Government, for generic research; and at organizational level where concepts have to get concretized as products. A remarkable initiative has been the Core group of Automotive R&D; (CAR) formed in the academia-industry collaboration format, headed by Dr R Chidambaram, Principal Scientific Advisor to the Government of India. The idea is to achieve breakthrough technologies that will ideally give India leadership position rather than having to catch up with the developed world. The CAR’s road map also takes into account the Indian context of medium-sized production volumes and its undesirable dependence on import of oil and gas.
The creation of the National Automotive Testing and R&D; Infrastructure Project (NATRiP) has been a very significant initiative in the automotive sector that aims to create a state-of-the-art testing, validation, homologation and R&D; infrastructure in the country and thereby create core global competencies and facilitate seamless integration of the Indian automotive industry with the world. The NATRiP ‘centres of excellence’, including the one in Chennai, provide for advanced research in emerging technologies and excellent proving grounds for new vehicles and the ideal platform to catapult India into the league of nations.
Nurturing human capital
The second task is the creation of a pipeline of human capital at different levels of skills and capabilities. When India becomes a global auto manufacturing hub, the steep rise in vehicle production will be accompanied by growth opportunities for auto component sector, boosted further by their participation in global business. Total export revenue of $25 billion by 2016 is realistic target. Similarly, given the favourable demographic profile of the country, design and engineering services along with back office operations hold great promise.
Obviously, it is imperative for the country to strengthen its most significant core competitive advantage namely skilled manpower. Going forward, this will be one of the imperatives for the sustained growth of this sector.
Ashok Leyland has also been playing a lead role in this area. The Ashok Leyland Bosch Center of Excellence with IIT Madras in 2006 offers a dual degree programme in Engineering Design and is the first of its kind in India. With a strong thrust on the modern practices of design, this programme gives students an exposure to real world problems in the industry that hastens their transition from academics to their eventual career avenues.
Another industry-academia interaction is the 2-year management programme that Ashok Leyland runs with the Suresh Mehta School of Management, IIT Mumbai which has already completed intense competency mapping over 2 years and have put in place a robust future leader development programme.
Some of the auto companies have joined hands with reputed colleges of engineering and technical education to offer career-oriented post-graduate courses in relevant specialized subjects, besides offering internship. Ashok Leyland has also joined hands with an array of reputed educational institutions to co-prepare and offer specialized courses that can give well-trained, industry-ready talent.
After-sales opportunities
The after-sales activities also open up huge employment opportunities. For most manufacturers, reaching service and parts to such a geographic spread becomes a very uphill task. At an industry level, CII has been alive to these limitations of OEMs and have therefore taken definitive steps in this regard. CII’s Skills Development Programme is a comprehensive one aimed to make India the skills capital of the world that trains operators – machinists, fitters, turners and the like – so as to endow them with the requisite skill sets to undertake service of vehicles on their own.
The memory of Mr. Santhanam deserves that we dwell on two more issues that will come to the fore when the anticipated volume explosion becomes a reality, because both were dear to him.
Coping with vehicle explosion
One obvious challenge is in respect of transport infrastructure and traffic environment involving roads of different descriptions, the many on-the-road facilities and law enforcement systems. The official projections point to a trebling of vehicle demand in ten years till 2016 – a proportionate increase in road infrastructure is fairly inconceivable, even if road construction regains speed in the new regime that will come to power at the centre. The accompanying problems will be felt differently, in intra-city and inter-city roads.
Already, traffic jams are a feature of our roads in the metros. At one level, there is no denying the aspirational meaning of personal transport, and undoubtedly it is human aspiration that powers national progress. The answer, to learn from the developed world, lies in creating an efficient and well-integrated multi-modal transport system. Bus transport will be an integral part of any intra-city transport system, especially given our socio-economic distribution.
The stage is set to usher in a new-age urban transport system with the vision for perfect integration between the various facets of traffic management, traffic infrastructure and transport systems to achieve ‘urban mobility’. Traffic management, apart from surface management, would involve traffic operation, mass transit operation, information collection and dissemination and ticketing. Information will make maximization of the benefits from the infrastructure possible.
Take the simple example of air-conditioned buses in cities, some of them thoughtfully linking airports and railway stations. People who have used them find them great value for money. Yet often these buses run empty, because no one knows the timetable!
We also need to focus on development of dedi
cated corridors, the linking of high-traffic points like airports, ports, railway stations and bus terminals. Transport systems of cities will be an orchestration of rail network, modern buses, depot scheduling and bay allocation, taxis on demand, customer-friendly, regulated autos and enhanced road safety systems.
What can make this orchestration possible is the introduction of infotronics to the transportation system. Ashok Leyland has been the standard bearer in this realm and is in the process of developing a suite of GPS-based products under the brand name ‘Alert’. The first product has been an On Board Unit that was introduced as a pilot project with the Metropolitan Transport Corporation (MTC). The Unit provided passenger information at both the bus depot and bus stop and opened a communication line between the driver and the control centre.
Tested to cover 18 months and over 12 million km, the project has now been extended to cover 600 more buses. It is easily scalable and can interface with vehicle systems to assess driver actions like excessive idling, over-speeding, over-revving, harsh acceleration and braking. What’s more, it is geared for future solutions like e-ticketing, in-bus announcement systems, online diagnostics of vehicles and CAN diagnostics (fuel consumption, km travelled, pressure and temperature).
The second dimension of the infrastructural task is in country-wide road connectivity. Substantial progress has been made on two banner projects – the Golden Quadrilateral and the North-South and East-West Corridors that cumulatively will cover over 13,000 km. While that will radically improve urban connectivity, bringing rural india into the network is a key and vital aspect. The 8th Plan linked 86% of the 1.3 lakh villages with a population of 1,000 to 1,500 with all-weather roads while the 9th Plan envisaged covering 85% of the 60,000 villages with a population of 1,500+ involving some 49,000 km and a further one lakh km in villages with less than 1,000 that would ensure coverage of 85% of such villages out of the total 4.6 lakh. Obviously, a lot has been done, but a lot is yet to be done.
India has made tremendous progress in road connectivity in the last one decade, both in terms of quality and length of roads laid. Road speeds have improved, allowing more efficient and modern vehicles, especially trucks and buses, to become economically viable. The growth in the popularity and population of the more efficient multi-axle vehicles, and later tractor trailers, bears testimony to this. India has demonstrated the role of quality roads in the modernization of a country’s automotive industry.
Yet, let us remember that roads are the bare hardware; what will create an efficient traffic environment are electronics based intelligent systems that can lead to cashless transactions that do away with time-consuming and often arbitrary human interfaces that make check posts centres of corruption.
A lot can be done with employment of technology to eliminate the pain points of vehicle owners and the helplessness of transport authorities, such as , the inspection and certification system, in the driving licence issue and monitoring. Facilities such as highway motels and trauma care centres will make cross-country travel even more enjoyable and safe.
Now about delivering value to the customer. A motorized vehicle has to deliver a set of values, including safety, ecology and economy. While market forces will lead to the success of products that make economic sense, all stakeholders in the auto industry have to collectively take on the moral – not just legal – responsibility for maximizing the total safety in the transport system and minimizing the ecological footprint of vehicles in manufacture and in use.
The Indian industry and industry associations have been quite alive and sensitive to these issues and have proactively mandated technological answers to these. However, automotive engineering alone cannot provide all the answers; use of enabling allied technologies and purposeful user education are part of a possible solution.
As consumers, we know how ineffective product manuals can be as tools of customer education. Business organizations have to see customer education as a means to better use of their products, thereby maximizing their value delivery, allowing them to live upto the product promise. Moreover, in the case of motorized vehicles, the manufacturers have a much greater responsibility, because they are not domestic appliances but potent machines used in public places, on roads that are shared by all.
At a time when we often read about road rage leading to loss of life, the need for customer awareness and education to change the mental makeup cannot be over-emphasized. We have of course successfully changed driver behavior in our driver training centres. Our customers vouchsafe for two major changes in their drivers after training. Thanks to training, correct driving techniques become second nature leading to 5% or more in fuel savings and a marked improvement in their safety record.
Recently, our driver training centre at Namakkal reached a milestone of 200,000 trainees. This good work is now being replicated at the Delhi centre run jointly with the Delhi Government. The company is in talks with more State Governments who have shown interest. Scientific training of drivers is a significant task in managing the future vehicle volumes, prompting the Government to plan one or two full-fledged driver training schools in every State.
The implementation of VAT and improvements in road connectivity have contributed immensely to making India one unified market where efficient centres of production and value addition get their due share in the value chain, wherein distances have become less important and efficiency the deciding factor. When the world emerges from the current recession and economic rationale gives way to protectionism, global economic activity will get stacked up on the primary axis of efficiency and cost competitiveness. That will be India’s opportunity to claim its legitimate share, in the process building its auto industry on the foundations of enterprise, people skills and best practices.
