1 Year agoThis article is a part of the ‘Listening to the Leaders’ series that explores the vision of a business leader and the role ‘Make in India’ initiative plays for their business to grow.
OVERVIEW OF THE COMPANY
ZF India, part of the German ZF Friedrichshafen AG, has been operational in India for over three decades. It emerged in the country when ZF Steering Gear Limited (India) got incorporated into the ZF group in 1981 as a joint venture.1 Initially, the company primarily manufactured gearboxes and transmissions for air shifts. But since then, it has diversified into more segments such automotive, construction equipment, farm equipment, marine, railway, wind energy and many others. They currently have eight manufacturing facilities spread all across the country which employs more than 3000 people.2
ZF India is a pioneer in manufacturing and supply of 'Ball and Nut Integral Hydraulic Power' along with 'Worm and Roller Mechanical Steering System' in India. It has a joint venture with ZF Lenksysteme GmbH. The plant is located at Vadu Budruk, Taluka- Shirur, a village 28 Km away from Pune - a city that is already a major automotive hub with original equipment manufacturers (OEM) like Force Motors, General Motors, Mercedes-Benz, Mahindra Trucks & Bus Limited and TATA Motors.
They recently expanded their operations in Pune by investing close to USD 22.5 million in setting up a 22-acre state-of-the-art manufacturing plant at Chakan. It is a multi-product facility where they assemble truck transmissions and chassis components (Torque Rods and V Links).3
The future growth prospects of the automobile component sector in India are promising. It has registered a turnover of USD 38.5 billion in the Financial Year (FY) 2014 – 2015 with a growth rate of 11%. The country’s exports of auto components also increased at a compound annual growth rate (CAGR) of 11% from 2010 to 2015. Export is estimated to account for as much as 26% of the market by the year 2021.4
SIGNIFICANCE OF MAKE IN INDIA
With 'Make in India' initiative's key focus sectors being the automobile, railway and renewable energy, various new opportunities are in ZF India's horizon. According to Managing Director of India Mr Piyush Munot, this gives “the company the confidence to invest further in the country and also produce components not only in India but also the rest of the world”. The Indian government’s focus on improving the infrastructure of the country will also undoubtedly prove to be a boost for the manufacturing sector. Other initiatives such as Skill India, Smart City and Start-Up India will only supplement such growth.
The skilled workforce readily available in India is a distinct advantage for not only manufacturing but for the engineering wing as well. The raw materials and supplies provided by the manufacturers within the country also give the company an edge in their competitiveness in the global market regarding the cost. Finally, the increasing demand in India for their products makes it possible for ZF India to keep following their strategy of being local for local. Thus, the manufacturing setup is already in place to meet this ever growing domestic demand.
VISION FOR FUTURE
In the words of Mr Piyush Munot, “ZF’s vision in India is to become a leading manufacturer of the auto component as well as the Indian industrial segments. We would like to leverage the opportunities that India offers to develop a product in India for India as well as for the globe. We feel that India will provide a significant advantage to ZF as a group. ZF Friedrichshafen AG believes in India as a growth market.”5
ZF India has undertaken several steps to make this vision a reality which includes expanding their operations as well as setting up of new facilities such as the one in Chakan, Pune where they have established a Global Purchasing Office. It also initiated the Campaign 'Wind of change' which aims to reach USD 111.18 million worth of export from India by 2017.6
The various initiatives launched by the government of India along with the policy changes will only serve as the catalyst for propelling this vision of ZF India.
3 http://www.motorindiaonline.in/buses/zf-india- poised-for- strong-growth/
6 http://www.ptinews.com/pressrelease/19041_press-subZF- Leverages-Indian- Operations