BorgWarner Inc., a world-wide supplier of automotive industry components and parts, is known for its powertrain products, which include manual and automatic transmissions and transmission components. The company has 60 manufacturing facilities across 18 countries. Borgwarner Emission System India Pvt. Ltd. manufactures clutch system parts, coolant pumps and EGR systems. “We are considered to be an Indian MNC. We localise to remain competitive. This is part of the BorgWarner strategy to be close to the customer and the market. We have all the technologies in-house. It is the differentiating factor between us and the competition. By 2023 we will be on the same level as our American and European partners with respect to R&D,” Sudhir Kumar Chawla, Managing Director, BorgWarner Emission Systems India, told T Murrali of AutoParts Asia, in an exclusive interview. The excerpts:-
Q: Can you update us about your products and the prospects to expand the portfolio.
A: We are into EGR modules, throttle bodies, thermostats, glow plugs -this is the portfolio from emissions. The emission products are all BS-VI compliant and they meet the requirements of the market. Of course, it will all depend on the strategy of the customers; we have the modules for both passenger cars and commercial vehicles (CVs) as also for diesel and gasoline.
Q: What is BorgWarner’s USP?
A: What we are trying to showcase is BorgWarners’s capability to give single point solutions. We have the technology for EGR valves, tubes and coolers. There is nobody else in the market giving a package solution having all these, as one company. We have all the technologies in-house, it is the differentiating factor between us and the competition. By 2023 we will be on the same level as our American and European partners with respect to R&D.
Q: Have you already roped in some customers for these BS-VI compliant products?
A: Yes, two products are already there, for Mahindra and Renault. We have also another one, EGR electric valve, for Cummins which will go into production this year. In BS-IV pneumatic valves are being used but for BS-VI you will require motorised electric valves. We already have the production lines available for this. It will depend on what the customers would want and their powertrain strategy for low or high pressure loops.
Q: Where do you see more opportunities for this?
A: Our counterparts in Europe have gone through the learning cycle for both high and low pressure loops. There they use low pressure loops also while here customers go in for high pressure. So we are just educating the customer on the utility of both these, based on our understanding and practice; we help the customers in defining their vehicle’s strategy in the light of our global experience and learning curve.
Q: Any new product in the portfolio of this division that is not available in India?
A: Two years ago we had brought in Euro-VI, mainly for export, which was a preparation for us for BS-VI; at that time we didn’t know that BS-VI would come in by 2020. It was really a blessing in disguise as OEMs want suppliers to give them a complete solution to take care of problems as and when they crop up.
Q: BS-VI should combine both EGR and SCR; but do you have a role in optimising them based on the engine capacity?
A: Yes; absolutely. It is for the customer to decide capacity of engine to go with EGR.
Q: For example, a commercial vehicle may require both. . .
A: Not every time. There have been applications for LCVs only with EGR up to six cylinders. Beyond six cylinders they would go for an EGR-SCR combination though some may want only SCR.
Q: Can SCR alone satisfy?
A: Ultimately, it’s a techno-commercial decision. Technically, both will have to join beyond Euro-5. We are finding more customers for the lower capacity engines, up to 6 cylinders, with EGR technology. Beyond that they will have to consider a combination of EGR-SCR but the cost factor will come into play.
Q: Is SCR in BorgWarner’s portfolio?
A: No, it is not in our portfolio but we are ready for either of the solutions that the customer wants. At this point we don’t have plans to manufacture SCR. So far we have been working with companies dealing with internal combustion engines. Now we are also working with hybrids and electric vehicles. We took over Remi and we also work with Tesla. We do have a product portfolio for this but this may not be the right time for India. Globally, there is a large focus on it.
Q: Another challenge is about the fuel availability for testing, as BS-VI is not exactly Euro-6. For exports, it is fine with Euro-VI. But how are you going to have trials for BS-VI?
A: Regarding fuel availability we have come to an understanding with our customers on how to meet it. Our engagement with customers is at an advanced stage of discussion for all BS-VI programmes. Everybody – Government, OEMs, and auto component manufacturers – is working with clear guidelines, so it will happen.
Q: Can you update us on your manufacturing operations?
A: For emissions we have two plants, one at Manesar and the other at Talegaon in Pune. At Manesar we are primarily making all the EGR solutions, the complete module with testing and validation, total engineering, application and manufacturing. In the Talegaonplant we use cold start technology to manufacture glow plugs, their control modules and, shortly, thermostats.
Q: Have you created an assembly line here, for thermostats?
A: We have been producing EGR systems from 2008; thermostats will be put up now as a separate product line. In 2012 we were primarily an EGR cooler supplier; from then every year we have been adding a product line – bypass, EGR tubes, electric valves and now the complete module with testing and validation facility with a high level of localisation. Currently the parts supplied to customers are highly localised, more than 90 percent; some products are even 97 percent. That is why we are considered to be an Indian MNC. We have to localise to remain competitive. This is part of the BorgWarner strategy to be close to the customer and the market.
Q: Are you sourcing some critical components where India has a cost advantage?
A: Cost advantage – people used to talk only about labour. But today all the giants have R&D labs here and engineering centres have opened up, right from the Japanese to Europeans.
Q: What about sourcing of child parts?
A: Sourcing of child parts does become an issue sometimes but we do sit with the OEMs to come up with solutions.
Q: Do BorgWarner plants outside India, source components from here?
A: Sometimes, yes. Of course it has to be techno-commercially beneficial. Duties come into play, so we evaluate case to case. This is for deemed exports.
Q: Will the capacity of the Manesar plant be sufficient, going forward?
A:Oh yes. Our role is to be ahead of time. For 2020, all the lines in our plant are ready today to meet customer requirements.
Q: Globally, BorgWarner wants to cross USD 15 billion by 2022. To what extent do you think India can contribute to that vision?
A: India is playing a good role especially with BS-IV and BS-VI coming into play. Our coolers for vehicles will keep on improving.
Q: How much has the content per vehicle improved since 2008, the time you started the division in India?
A: For two years the automotive industry as a whole was stagnant. 2012 was good when BS-IV moved to more cities. Again, 2016 was a good year for us and 2017 will continue the growth with BS-IV becoming pan India.
A lot of applications have come in with BS-IV like EGR for passenger cars, CVs and off-road vehicles. The waiting time is over, now it is all execution for us.
Q: At what percentage is your CAGR?
A: It is reflected in our global statement at the corporate level. We have one financial result which is in the US; we don’t talk of local numbers. Of course, ours is definitely better than the market rate