The synergy or the vital energy, the value system, the power to spot and hone talents from the family and outside, accent on individual creativity, very strong industrial relations and the unswerving focus on the automotive sector make the century-old TVS Group, the largest auto ancillary conglomerate in India, a unique success story in the Indian industrial landscape. With a combined turnover of over USD 7.2 Billion, the group companies are showpieces of home-brewed economic vision, business acumen and world-class product quality. They continuously prosper creating value for the group and bringing broader benefits for all stakeholders.
Suresh Krishna, who floated Sundram Fasteners and won world markets for his products, has been the Chairman of TVS Group since 2015. In conversation with T Murrali ofAutoParts Asia, he unfolds the core of the group’s industrial development philosophy and vision: “We are on a good wicket in this Sunrise (automotive) industry where India is ranked third, soon to be second; it would certainly attract investment. Where else do you have the labour and market advantage; the intellectual, value-system, name and recognition advantage? If I have $100, I will only invest in India because the zenith of the industry is far ahead.”
Q: How was the journey for you as Chairman of the TVS Group in the past three years?
A: All our companies have done well in the automotive industry. Today, automotive is the sunrise industry and it will continue to rise; the zenith of the industry is still far ahead.
Q: What has been the focus of your group companies? How do you see this pan out in the near future?
A: It has been mainly internal combustion engine-oriented. India is growing at double digits in the automotive industry and we are completely dedicated to it; we have very little business outside the automotive industry. That’s why TVS companies are all doing well.
Even 10 years ago I had told people that this is a sunrise industry; it will keep going as we have to provide transportation to so many other sectors for movement of people and materials.
Q: How does the group continue with the said-to-be conservative TVS family value system, and the ability to be modern and innovative?
A: My generation has followed the TVS value system but has also modernised. New generations always come with fresh ideas and innovation backed by current educational parameters. They have to manage; the new generation has already put in five to 20 years of service with the company. They have absorbed our values, all the do’s-and-don’ts of the group. We will continue that. They have faith in the value system; they know it pays. We have always stood by our shareholders, customers, labour force and stakeholders. All of them have prospered and we continue to produce quality goods. None of the TVS companies have reported sick so far. We don’t have to copy or replicate someone else. Each group has its own philosophy, its own way of doing things; we have to maximise wherever possible.
Q: Earlier the TVS Group companies were vying for Deming Awards. After a lull there seems to be a fresh drive for it. Why is this so?
A: Yes, but people realise it’s not a ticket to anything. It is an internal culture that needs to be developed inside the company. I would rather have a Deming kind of company than a Deming Award. The award is just to decorate the mantelpiece; it has to be a way of life.
Q: What kind of synergies do you see among your group companies? Is there scope for improvement?
A: Being in the TVS group is a huge plus. Our brand opens doors; that’s what I feel is synergy – the energy of the group – which is enormous. It cannot be quantified at all. The synergy is not only with my customers but with the public at large, the bankers, technology companies, export markets and much more. I would say our companies are show-pieces; look at what we have accomplished in the last hundred years. This type of synergy you cannot buy; it has to be created.
Q: Do you see scope for standardisation?
A: We see it in all our group companies. Each one has its own way of doing work. It is because of that effort do we get innovation. Individual creativity is very important.
Q: What about procurement and supply chain?
A: The kinds of things we buy are so very different that the ability to negotiate and purchase large quantities is essential. Each company is now large enough to get the best price possible.
Q: How has been the HR policies?
A: You can see that none of our companies have labour problems. There is a common thread of value systems running through the group. We had a strike in the TVS Group companies in 1977 at Padi, in Chennai, but everything was sorted out.
Q: You said the core business of the holding company is dealership, repair and maintenance, and spare parts, and you want to double the turnover. How is the plan going?
A: It is going very well. I don’t have the exact figures but it’s on course. Of course, vehicles are getting better and the use of spares is getting stretched.
Q: The automotive industry landscape is changing; today consumer purchase is done differently from traditional methods. How does the TVS holding company prepare to face this evolving trend?
A: In my opinion, sales of spares will also go the Amazon way – online. Most of the selling in the world is slowly tending to this.
Q: From the spare parts perspective, DIY (do it yourself) is still not prevalent here while it is popular elsewhere. What is your view?
A: Because labour is very expensive in America and the West, people want to do things themselves.
Q: How do you see online buying taking root here?
A: Online will get you the part; but you will still need a mechanic to fit it. If anything goes wrong, you will have to send the part back to the dealer, especially with electronics.
Q: In contrast with CVs, for example the wheel bearing hub, it is first-fit, first-fill; you don’t even have to lubricate it. It is for the lifetime of the part. Have not these features improved the life of parts?
A: Yes, that’s true. Also, overloading has come down and road surfaces have improved; all these have increased the life of the vehicle.
Q: Do you think it is a big saving for the economy; as this conserves energy and avoids waste?
A: In America people change cars because they want something new, not because of any lapse in the vehicle. Of course, they are a ‘waste’ for society; lots of wastage takes place there. India has still not reached that stage; it might happen if the standard of living goes up substantially. We are going there – everybody has a smart phone now, and they want all sorts of data.
Q: From the aftermarket point of view there is one missing link in India; it is remanufacturing. We waste a lot of resources. Dealers just change, they don’t care about remanufacture. What is your view?
A: There were days when remanufacturing was feasible. It gained currency during shortages, especially during World War II when many parts were not available. Also, labour costs were so low that remanufacturing was affordable. Today, it’s all fit-and-ready; just plug in. Also, products have become very complicated now.
Q: But President Obama brought in a ruling in America that they should have remanufacturing for their service vehicle parts and they saved a lot of money.
A: Yes, but the automotive technology today is so complex, with so much of electronics, that remanufacturing becomes difficult. I don’t think it’s a good option.
Q: Is electro-mobility bothering the automotive industry?
A: I don’t think the automotive industry in India is threatened by the electric car, and I keep saying this. It would take a long time to become a reality in India for several reasons. One is that the internal combustion engine is not going to go out of fashion; secondly, we require enormous infrastructure in the country to make electric cars work, and third, we need a lot of subsidy from the Government to launch an electric vehicle.
Q: Lithium and cobalt are also big issues?
A: Yes, they are. People are looking at alternatives like sodium vapour. We are still trying to find out which way to go. It would take some time to solve all these issues – it’s not possible to have electric cars from January 2019. I see the industry merrily chugging along for the next 30-40 years without a problem. The world view is that only 20 to 25 percent will be electric cars. One positive development that may happen is that the oil producing countries could drop oil prices. What is important is the cost of ownership to the customer, whether the car is electric or not.
Q: The crux of the matter is that the thermal efficiency of the internal combustion engine for the last hundred years has touched a maximum of only 55 percent. So, there is much headroom for development.
A: True. The electric car is a reality; it’s staring in your face but how long it will take to replace the internal combustion engine and make an impact on society remains to be seen. I have no idea when it would happen; my feeling is 25 to 30 years, one full generation.
Q: What about your long-term plans?
A: Well, we are not going to make a car, though the automotive industry will grow. We are on a good wicket in this sunrise industry where India is ranked third, soon to be second; it would certainly attract investment. Where else do you have the labour and market advantage; the intellectual, value system, name and recognition advantage? If I have $100, I will only invest in India.