The Indian units of the Schaeffler Group, INA Bearings India Pvt Ltd and LuK India Pvt Ltd, are being merged with the listed entity Schaeffler India Ltd. The merger, to be completed formally next year, is to combine the strengths and competencies of all the three and establish one strong Schaeffler entity. “We have a defined strategy called ‘Mobility for Tomorrow’. We do have projects with customers in India who are keen on exploring our unique technologies like cylinder deactivation devices. Next year we will be producing the dual-mass flywheels and the travel adjusted clutch, which will be new product lines in India. We are closely working with IBM at their R&D centres on IoT, industry 4.0 and big data digitalisation. We are working on evolving digitalisation needs for e-mobility applicable to the automotive industry,” Dharmesh Arora, CEO, Schaeffler India, told T Murrali of AutoParts Asia in an exclusive interview. The edited excerpts:
Q: How will the merger of INA India and LuK India with Schaeffler India benefit the customers?
A: We have three entities. Among this, the product profile is such that there is no overlap; you don’t have the same product being manufactured by the three companies, but there are opportunities for synergies to be achieved. For example, INA makes clutch release bearings, within which there is a ball bearing that is actually a product of FAG. So when you try to give the customer a clutch solution you are touching all the three entities. The customer can work with you as one supplier to give them a complete system instead of going to three different companies. It makes it easier for them and gives us an opportunity to provide the entire system; it’s a win-win for all.
Q: With changes in technology, like BS-III to IV or BS-IV to VI, there is drop in fuel efficiency. The challenge for suppliers who are not directly connected to after-treatment is to provide solutions to offset the loss. So how does Schaeffler help?
A: From an engine point of view, Schaeffler is into combustion technology. We are into improving the combustion efficiency in the engine. Take for instance the hydraulic lasher – today it is being used by many of the OEMs in their powertrains. When BS-VI comes through, many of the powertrains that might have solutions like tappets might want to go to this to improve combustion efficiency in the engine. Many of the powertrains may have to graduate to implement cam phasers – these are all solutions to improve combustion efficiency within the engine.
Powertrains are becoming smaller with 1.6 litres being replaced by 1.4 and then 1.2 etc. Even though engines are smaller, the torque and power needs of the consumers are still very high. How to balance this is the conflicting demand on OEMs. They have to strike a fine balance among performance, efficiency and emissions. When you make smaller engines it creates irregularities in the powertrain with more shake and vibrations, for which we have solutions like dual-mass flywheels. These irregularities have to be properly dampened; that is a key core competency of LuK. Dual-mass flywheel is one solution, pendulum based flywheel is another. These are solutions we can bring in to make the engines more efficient.
Q: To what extent can they enhance fuel efficiency?
A: It depends on the kind of efficiency you are looking for and the cost and complexities you can fit into the engine. We have solutions like the thermal management module which gives precise control of fuel and coolant temperatures on a dynamic basis. In the past we had directly mounted fans that were always running; now we have thermal controls that allow the fans to run only when the temperature reaches a certain point. There are separate channels for flow of coolant within the engine through a complex management of fluids. That’s a core technology we have developed which is being applied to Euro-6 or higher levels of engines.
Q: Can it be applied for deactivation of cylinders?
A: Yes, it can be. Those are two independent solutions that can be applied to each other. The amount of coolant flowing through the whole engine can be managed, so you are precisely controlling the temperature. In the valve train we can shut off the fuel entry into certain cylinders at certain load conditions of the engine. We do make such cylinder deactivation devices. Globally, for Ford we supply the cylinder deactivation systems for their EcoBoost engines. We do have projects with customers in India who are keen on exploring this.
Q: You are also working on increasing driving comfort for the end user. What kind of technologies do you have for this?
A: One thing happening of late in India is transmission automation, right from AMTs – automated manual transmission to DCTs – dual clutch transmission and up to fully automatic transmission. We have something called ECM -Electronic Clutch Management. It is a two-pedal system; you take away the clutch from the vehicle, but you have the gears. It is a classic manual transmission where the OEM doesn’t have to make any change. According to our study, for most consumers, the biggest pain-point is clutching and de-clutching, not changing gears. We have automated the clutch function, so the driver has just to change gears; the system uses hydraulic actuators to activate the clutch automatically. It is an entry level of automation with a much lower cost than AMT.
Q: What happens if the driver doesn’t take his foot off the accelerator and still shifts gears?
A: This technology takes care of abuse, one of the major problems in manual clutches. Clutch riding is also a problem when you half press the clutch and continue driving. The clutch gets overheated and the friction material is burnt. With ECM this problem is removed completely; there is no possibility of any form of abuse as there is no clutch pedal. It’s just a question of software calibration. Any problematic situation that may arise during driving can be programmed into the engine control module and easily calibrated.
Q: What is the update on the new generation friction material in clutch facing?
A: As AMTs have been launched there is a need for different kinds of high performance friction material. We have introduced a material called 8080 that has been well recommended for automated transmission applications; we are already providing it to a number of customers in India. Next year we will be introducing the TAC (Travel Adjusted Clutch) which automatically adjusts the gap between the free-play that keeps increasing over use. It is similar to the slack-adjuster for brakes in commercial vehicles. The performance throughout the life of the clutch is consistent; it does not deteriorate. It automatically keeps regulating the gap through a self-compensating mechanism in the clutch. This will be in the production vehicle next year in India.
Q: INA makes lots of valve-train components. You are also the largest supplier of water pump bearings. Of late, OEMs are combining water pumps with the oil pump. Are you working on some technologies that will help OEMs integrate these?
A: We work closely with the OEMs. Even if they buy water pumps from a company they specify that INA bearings must be used. It is an indicator of our brand presence and the quality we command in water pump bearings; it’s a very important piece of business for us.
Q: Any new products likely from INA in the near future?
A: We are continuing to expand, for example, our needle bearing portfolio; we are the inventors of the caged needle bearing used globally. We plan to build a stronger presence in the country. Also hydraulic lash adjusters, a lot more powertrains will be using them. Next year we will be producing the dual-mass flywheels and the travel adjusted clutch, which will be new product lines in India.
Q: Can you tell us about your manufacturing plants in India?
A: We have two plants in Vadodara – Savli and Maneja; one each in Pune and Hosur. We are expanding Pune and Savli plants by having new buildings, in the next six months to one year, in the same land area. The other two plants still have some area within for expansion.
Q: What are the solutions for CVs?
A: We supply all kinds of FAG bearings for CVs; transmission and chassis-related bearings to Ashok Leyland, Tata, DICV, and Volvo-Eicher. We also supply clutches all the way up to 430mm large size. There is a shift happening in the clutch environment. Some OEMs are still using coil spring type of clutches on the pressure plates; we have diaphragm springs that are far superior in terms of technological performance. Most of the OEMs are now shifting to this. On the engine side we are trying to adapt some of the solutions that have worked very well in small engines also.
Q: From the CV point of view almost all OEMs are working on increasing the drain intervals of their lubricants. Companies that make products to reduce friction are working in parallel to match these requirements. What kind of solutions do you have to match this?
A: From the perspective of the components we make, we need to provide them coating technologies for our products that can withstand such drain intervals. Long intervals require superior quality of oils for engine, gearbox and differential, and some of the components may not be getting adequate supply of that lubrication. Still in those conditions our products can work successfully, so coating technology becomes very important. We have very strong in-house coating facilities in Germany to develop superior solutions that we have applied in India. Another example: five to ten years ago most of the OEMs in India were using Gen-1 wheel-bearings that would have to be replaced after 30,000 to 50,000km. The Gen-3 bearings we use today can work up to 1.5 lakh to 2 lakh km; most customers may never replace them. Similar solutions are there for CVs; we call it sealed wheel bearings as they are sealed for life. You just have to install and forget about it.
Q: What changes have the multinational OEMs of CVs brought to India?
A: There is definitely a shift happening in terms of technological advance and refinement. For years people thought it is a cost-conscious market, so let’s not touch it. Today, the operator model is changing. Now we have fleet operators who own from 50 to 100 trucks; in the past it was not so with owner-drivers managing maybe one to five trucks. Fleet operators are a lot more professional focusing on turnaround time, uptime and such parameters; they require different kinds of service solutions. The market is changing; the way business is run is changing. New companies are bringing in new solutions which have been working well elsewhere. Once the operators get a feel of it, they push other OEMs to follow suit. The diaphragm spring is a classic example.
Q: With electric vehicles the need for bearings may come down as friction is much reduced. How is Schaeffler preparing for electro-mobility in India?
A: We have a defined strategy called ‘Mobility for tomorrow’. We need to be prepared for electrification, but the IC engines will be around for several decades. Our view is that by 2030 (the date for expected full electro-mobility in India) 30 percent of vehicles will still be having IC engines while another 30 percent will not have an engine at all – it will be completely battery operated. However, 40 percent will have both, engines as well as electric motors. This is a transition phase and we have developed solutions for both hybrids and electric.
The second part is intera-city mobility. Urbanisation is increasing, and bigger cities are coming up, with the need for increased personal mobility. Future mobility products may not look like cars; they may have wheels but will be battery operated with much digital content in them. We have a working prototype of this type of vehicle in Germany. Then we have inter-city, with specific corridors for movement of freight for which we can provide strong solutions. High speed trains and aero-space are also a part of this. We have good business with Airbus, Boeing and all the big aerospace companies. The most important thing is that all of these need energy – efficient, renewable and sustainable energy. For us it is important to see how that energy is created.
Q: How do you manage the change?
A: Things are changing. Many of the components we produce today may not be required in a full electric vehicle. But we have been anticipating it and are investing to meet this challenge. We started the journey in 1995; in the last six months we have acquired a few companies. We are closely working with IBM at their R&D centres on IoT, industry 4.0 and big data digitalisation. We are working with our HQ on evolving digitalisation needs for e-mobility applicable to the automotive industry; there are many solutions we are looking into. In the hybridisation phase the content per car actually goes up. We need to see where the sweet spots are and convert them into opportunities. The change is coming; and the change is big.
Q: What exactly is the role of your R&D centres in India? How are they connected to Schaeffler globally? Will they evolve as centres of excellence?
A: We are integrated with our global technology centres. In Maneja we have the Schaeffler technology centre which primarily assesses all our industrial customers with bearing applications. Product development, selection, application in the right environment, consultancy and solutions are provided here. On the automotive side Pune is the main centre of development, while in Hosur it is clutch and transmissions. In a year we hope to merge the three R&D centres into one entity. They work very closely with our HQ and other development centres around the world, depending upon the area of competence and expertise.
In India we are primarily focusing on two areas that we are developing as the centre of expertise for global – two-wheelers up to 250cc motorcycles and agricultural vehicles like tractors and other equipment. For us, the most important thing is to be close to the customer, where the customer’s needs are. This year, in India, about 20 million two-wheelers will be produced. We also have strong, local OEMs who design and develop their own two-wheelers here. Honda, Yamaha, Suzuki are all building up capabilities in India; not just manufacturing but product development capability – we work very closely with them. Harley Davidson is here, a very important customer for us globally. Coming to tractors, we are the largest tractor manufacturer in the world with 700,000 tractors produced with strong local OEMs like Mahindra, Swaraj, TAFE, etc. They all design and produce their own tractors. We work closely with them as also the international companies like CNH, JCB and so on.
Q: Will there be any effect in your aftermarket business on account of consolidation of three brands?
A: It presents new opportunities for them. In the past 35 years our presence was primarily in clutches. FAG has been in India for the past 50 years. Now the merger affords an opportunity for the distribution channel of the aftermarket to represent all products from all three brands. It helps to make more inroads while customers also get a wider range of products from one place.
Q: Are all the products you supply to OEMs available in the aftermarket?
A: Yes, some products like the clutch have a big demand in the aftermarket while others have less demand like the hydraulic lash adjuster which is permanent and life-long; once you install it in the engine it does not need replacement unless there is a vehicle crash or the engine is rebuilt. They are available, but market demand would depend on the nature of the product.
Q: Schaeffler is very strong in remanufacturing globally but in India the concept has not taken off. What is your view on this? Is there potential for remanufacturing here?
A: Let me give you two examples; one from industry and one from automotive. For industry – the railways. We have been supplying bearings to Delhi Metro for the last 10 years; these bearings have run over 400,000km and need to be refurbished. You can either replace them or recondition and extend their life. Right now they are in the process of reconditioning. We bring those bearings back from Delhi to our plant in Maneja. We open and inspect them; cleaning and re-greasing or replacement of parts is done and the bearings are rebuilt and supplied back to the Delhi Metro for re-installation on the coaches. This is something we have started early this year. We have done three batches of such bearings; each batch is 80 to 100 bearings so we have done around 400 bearings so far.
The clutch would be an interesting example for automotive – coil spring transition to diaphragm spring. When a clutch breaks down on the road, the mechanics open the engine on site and try to fix it; they take out the pressure plate and replace it by rebuilding the assembly. In a typical diaphragm type clutch these are riveted solutions, they are not supposed to be rebuilt like the coil spring. We have redesigned our components so that you can replace the pressure plate in a diaphragm clutch also. Now we can remanufacture the complete pressure plate and extend the life of the diaphragm.
Q: Can you tell us about exports?
A: The business models are different. When you look at the industrial or bearing business, we have in our catalogue 40,000 different products. There is no way that we can produce all of them in India or any other country. So there is always an exchange to make sure customers can get the whole portfolio. That’s one reason why FAG exports from India.
INA and LuK primarily produce automotive components. Automotive customers require just-in-time, every day supplies but that does not fit very well into the export model. So we have Tier-2 suppliers exporting castings and individual components to our global locations. Tier-2 and Tier-3 levels are a lot more feasible than finished goods as customers for finished goods want just-in-time, with suppliers very close to their plants, and are not willing to take the risk of long lead-times.