@schaeffler’s Harsha Kadam on navigating an economic slowdown
Harsha Kadam, MD, Schaeffler India says a #slowdown does not stop the company from making #investments. He adds that their localisation plans are also on track and believes that the slowdown is temporary — growth will come back.
#HarshaKadam #Economy #Business #OutlookBusiness #OutlookMagazine #OutlookGroup
#HarshaKadam #Economy #Business #OutlookBusiness #OutlookMagazine #OutlookGroup
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00:00 Considering that the past year has been quite tough for the auto sector, do you see any
00:08 meaningful recovery in the next few months?
00:10 Well, my view on this, the next few months definitely we do not see recovery.
00:15 Well, if it happens, it's good, but looks difficult.
00:22 However, surely October was a better month in terms of sales.
00:28 I guess this is more just clearing up the inventories that have piled up.
00:32 What would be interesting to watch is post March, April onwards, when the BS6 kicks in,
00:40 what impact or effect that would have on the pull from the market is going to tell the
00:45 true story.
00:46 What interesting changes have you implemented at Schaeffler India to work around the slowdown?
00:51 Fortunately for us in Schaeffler India, our business is pretty well balanced between the
00:56 automotive and the industry part.
00:59 More or less 50% of the business is automotive and the rest 50% is industry.
01:03 While the automotive, yes, is in a downturn, the industrial part of the business is doing
01:09 pretty well, did pretty well.
01:11 And we in Schaeffler, we did much better than the industry growth.
01:15 And that has helped to kind of balance out the degrowth that we see in the automotive
01:22 sector.
01:23 That's for one.
01:24 Second, obviously, of course, we did continue to continue with our investments, which we
01:32 had already planned.
01:33 We did not stop any investments.
01:35 Our localization plans are on track.
01:37 A lot of localizations and we're moving product lines from the rest of the world into India
01:42 because we believe whatever slowdown we do see is an interim situation.
01:48 Well, it's a little bit longer this time, though, but certainly it's going to come back.
01:53 So nevertheless, so we continue with our investments.
01:56 We continue with developing the competencies of our people, preparing them for the best
02:02 situations that's going to come when the growth comes in.
02:05 So our focus still remains.
02:07 We have diversified our product portfolio.
02:09 We are launching new product lines when it comes to the automotive with the shift in
02:14 technology from the diesel to the petrol.
02:16 So bringing in a spate of products in the petrol engine application as well.
02:22 So on the industrial side, as I said, we localized a lot of products which we were importing
02:28 from the rest of the world.
02:30 That's helping us not to mention one emerging field, and that's digitalization, wherein
02:36 we see immense opportunities to add more value to our customer base.
02:42 Of course, this poses new kinds of challenges in terms of developing our supply chain capabilities
02:48 and people capabilities.
02:50 But we are on the job.
02:52 Can presence in multiple segments help you navigate the slowdown better?
02:56 As I mentioned earlier, if you look at the automotive sector, it's in a downturn.
03:02 So I wouldn't like to touch base on that.
03:05 Look at the industrial sector and we have various sectors in the industrial arena.
03:11 Railways for one, that's doing phenomenally well.
03:14 The government policies and the investments the government is making is propelling the
03:18 railway industry growth.
03:19 And we are riding on that.
03:21 Look at the wind segment.
03:23 Although the India wind story is not a success story, so to say, as far as the situation
03:29 is concerned now.
03:30 But the wind turbine manufacturers are using India as a manufacturing base to export out
03:36 of India.
03:37 And that's helping us to a great extent.
03:39 So wherein investments are coming in, you hear a lot of new companies start putting
03:43 up manufacturing facilities here.
03:45 And thereby that is creating a good demand for us on the wind sector.
03:49 Yes, there are a few of the sectors in the industrial arena also which have not done
03:54 well.
03:55 Industrial automation and machine tool industry, that did not do well.
03:59 Look at the steel and the cement sector.
04:01 Steel, fortunately, is still doing good.
04:03 So as I said, some of the sectors are doing well and we are riding that way.
04:10 Also, what we did is we took a shift in the mix of our business between the OEM and the
04:17 distribution or the aftermarket part of the business.
04:20 So we have started to do pretty well in the distribution business, which is our aftermarket
04:24 business.
04:26 As a percentage of total sale, this used to be around 24-25%.
04:29 And currently within a year, we are moved up to 35%.
04:32 And that's pretty strong growth.
04:35 What are the growth drivers for the company in India?
04:37 I would say growth drivers, innovation definitely is one of the things that we need to start
04:44 looking at seriously, every organisation.
04:47 And agility is definitely one of the need of the hour if we have to propel growth, continue
04:52 to.
04:53 Because when we benchmark with the rest of the world, this is my observation that we
04:59 still have a long way to go in matching the efficiencies of some of the countries, be
05:05 it China, where they are more flexible and more agile.
05:09 We Indians, we still have a long way to go.
05:11 We believe it's not that we cannot do, it's a mindset change.
05:16 And I guess this slowdown is a fantastic opportunity for us to discover those gaps and plug those
05:23 gaps and work on those gaps and make it into a strength so that when the growth curve begins
05:29 to turn in the positive direction, I think we will be better placed than the rest of
05:33 the world in terms of cost competitiveness.
05:35 [MUSIC PLAYING]
05:38 (whooshing)