ZF, the leading global player in driveline and chassis technology, has been represented in India with joint ventures and licence partnerships for over three decades. In 2007, ZF India Pvt. Ltd. commenced operations in Pune with its focus on production of axles 
and off-road drivelines and commercial vehicle technology. With the construction equipment segment in India set for long-term growth, ZF is looking to make deeper inroads into the space with its range of future-ready products and technology. We find out more from Mr. Piyush Munot, Managing Director, ZF India, in an exclusive interview.
Excerpts:
How is the construction segment in India at present? How has ZF’s business in this space fared over the last 12 months?
Demand for mining and construction equipments to a large extent are affected due to various government policy changes & macro-economic indicators. Currently the high interest rates, slowdown in infrastructure investments, liquidity crunch and several regulatory roadblocks have led to a sharp decline in demand for mining and construction equipment (MCE) during the past three quarters, with the slowdown being particularly pronounced since January 2013. Deferment of private projects and the slow pace of infrastructural investments are the key reasons majorly affecting construction equipment volumes. Curbs on mining in several geographies have also impacted demand for mining equipment.
In the last 12 months ZF has consolidated its footprint in the segment. We have consolidated our footprint in the CE business with the wind power facility located at Coimbatore. The synergies that we will derive from this consolidation will prove advantageous to our customers in both segments.
Kindly give us a brief update on your presence in this segment. How has the progress been since ZF India commenced production in 2010?
The Indian market is considered of strategic importance for the group and our ongoing activities in the region are a proof of the same. We started our local assembly in 2010 of our backhoe loader axle. The next year saw an addition of two more product lines (backhoe transmissions and wheel loader axles).
Our activities in India range from increasing local sourcing of the products assembled in India to setting up of an Indian sourcing base for our overseas interests and integration of our off-highway plant with our wind power plant to benefit from synergies. With regard to business development, from having a small sales presence, we are now growing our facilities to include a local engineering capability and strengthening our sales force. In spite of the current economic depression, ZF is making substantial investments into our human resources towards gearing up for the robust market demands of the future.
What are the product offerings from ZF in the off-highway segment? Have you introduced any latest product models in the last few months and do you have any new launches coming up?
ZF has been a pioneer in introducing state-of-the-art technologies since 25 years in India. In the CE space, it already offers backhoe 
loaders and wheel loaders to the Indian market. We envision good growth potential for these products inline with the growth of the overall CE market in India. We will also continue to watch the demand for motor graders, dumper trucks, tow tractors, pick & carry cranes, transit mixers and soil compactors and decide to localize them when the time is right.
How does the off-highway market view automatic transmissions? What are the advantages delivered by ZF automatics, particularly in the off-highway sector?
Most of the off-highway applications require an automatic transmission application in order to improve the operational efficiency with regard to speed/shift control traction continuity, etc. The awareness of automatic transmissions is increasingly becoming a necessity in India, as most of the population of wheel loaders and heavy material handling equipment have fully automatic transmissions in them in general.
ZF has aptly answered these requirements through its state-of-the-art clutch modulation strategies in its current Ergopower transmission lines, a proven fully automatic powershift transmission system which has been optimized for different construction machinery types and offers the innovative feature of five instead of four gears.
This transmission has a TCU controller which is expandable to include CAN controls, telematics and capabilities to synergize with the rest of the drive-line, namely, axle differentials and inter-axle differentials. The main advantage of a clutch modulation system is that the shifting is not affected by the operator’s skills. This results in cut in operating cost, improved efficiency, reduced fatigue of the operator and improved safety at the construction site.
The ZF Ergopower provides additional possibilities for connecting an electronic driveline management, thus enabling vehicle specific controls.
What is the production capacity at your Coimbatore facility? Do you see any scope for expanding your footprint in the coming years?
The installed capacity at the Coimbatore facility is 25,000 sets of axles and transmissions for applications in backhoe & wheel loader segments. Based on demand fluctuations, we are able to scale our production facilities and be agile to market conditions. Further, the facility has enough room not only for vertical integration but also for addition of new products suitable for the Indian CE segment.
Who are the major OEM customers you work with? Are you a single source of axles/transmissions to any of them?
In the CE market segment both in India and overseas, we work with Ashok Leyland John Deere, Hyundai, Leeboy, THCM, to name a few. Owing to the nature of the drive-line business, we are single source partners in the product lines that we supply to our OEMs.
Could you share details of your workforce and the kind of training they go through? Do any R&D activities happen out of India for the domestic as well as global markets?
The ZF Group invests about five per cent (2012: Eur 861 million) of total revenue in research and development every year. In order to further strengthen and expand ZF’s position, the group will invest over Eur 1 billion also in the years to come. This focus on research and development has led the company to develop pioneering product solutions in the past and give futuristic concepts that will improve motion and mobility across automotive and industrial segments.
Recently, for the Indian market, we strengthened our business development footprint through establishing a local engineering resource. The engineering team in India will focus on product strategies in order to address better product positioning for the local market through design-to-market exercises. Additionally, the local resource will support our OEM customers in their new projects, bridging the geographic divide between India and Germany, thereby reducing lead times for a faster response and effective project-to-business conversions.
The construction segment is expected to see immense growth in the next few years. What are your views on this, and what role is ZF expected to play in the emerging situation?
India’s construction equipment industry is at a watershed in its evolution and will experience strong growth spurred by the nation’s economic development. The Indian construction equipment market was estimated at $4 billion in 2011. Riding on the favorable economic environment, the industry is expected to reach $10 billion by 2016, growing at 20 per cent annually. Demand for equipment is projected to expand to over 91,000 units in 2016 from around 50,000 units in 2011. One of the key factors contributing to this market growth is $1 trillion infrastructure investment during 12th Five-Year Plan.
ZF is also a leading player in the construction equipment segment. In the field of construction equipment, it is one of the technology and innovation leaders worldwide. Over the years ZF has developed and manufactured top-notch products in the segment. As mentioned earlier ZF has always taken the lead when it comes to developing and enhancing products to meet the ever rising demands of the industry. ZF’s technology and manufacturing excellence and its experience in the industry will surely drive the industry towards further growth.