With turnover of $ 1.35 billion, JBM Group, one of the leading tier-1 suppliers to auto OEMs, has today a diversified portfolio to serve sectors such as automotive, engineering & design services, renewable energy and education. With his innovative ideas and dynamic leadership traits, Nishant Arya, Executive Director of JBM Group, has been instrumental in forging technical collaborations and JVs with global majors and taking the group to newer heights. In this exclusive interview with APF, Nishant Arya analyses the impact of new regulations and changing market landscape on the automotive and auto component industry.
JBM Group has been associated with the auto industry for the last 32 years. How has your business evolved over these years?
The journey has been eventful with us reaching new milestones every now and then. We had started the journey with our association with Maruti Suzuki and 2017 marks the completion of 30 years of partnership. Our joint venture with Maruti Suzuki has redefined auto component manufacturing in India. At Jay Bharat Maruti (JBM), we stood rock solid behind Maruti Suzuki India’s promise of delivering world-class personal mobility to suit every Indian geographical and socio-economical segment. The partnership helped us internalise not only the technology but also processes, which improved operational and financial efficiency for the company. JBM Group has been consistently growing at a CAGR of around 20 to 25 per cent over the last three to four years and I am confident to say that the growth will only increase further given the expansion plans we have.
The blend of innovation and value engineering gained roots in all our group companies very early and we have reaped rich dividends of that. JBM Auto, which is the flagship company of the group and is a prime supplier of components for all major OEMs, grew 25 per cent last year – the highest in the industry.
We have changed our product portfolio based on the needs of customers and the overall business trends. From an auto component manufacturer, we have become an OEM with the commercial launch of our bus division three years ago. Today this division is paving our way to exponential growth in coming years. We are providing a 360-degree portfolio of low-floor buses with electric buses being added to the existing portfolio of CNG and diesel. The journey is getting more exciting for us.
The Indian auto industry witnessed lot of turbulence in the market in 2017 (such as bans on diesel vehicles, shift to BS IV, GST, etc). How this has affected the auto component industry?
BS IV and GST were impending. Everyone knew about them and therefore had made necessary preparations in time. For the uninitiated, these announcements would have caused some disruption but JBM Group was well prepared. We have hit the ground running. Areas like diesel vehicle ban and other contentious decisions are being contested by OEMs. Commenting on these will be inappropriate at this stage. Just to point out, auto component industry is agnostic to bans on a particular type of vehicle. In other words, we are immune to such decisions.
The auto industry is set to embrace BS-VI norms by 2020. Will it be ready for this?
The shift to BS VI is a quantum leap, necessitating complete overhauling of manufacturing systems. There is a time constraint but there is no other choice for the industry. Everyone is feeling the burn but companies have started moving in the direction. I am sure all stakeholders will feel the benefits of the shift in the long-term.
How is JBM adopting to this change (shift from BS IV to BS VI)? What kind of opportunities are you looking at?
From the point of view of auto components makers, the shift to BS VI will open up new opportunities. To understand the opportunities, let us look at what an auto company requires to achieve a reduction in particulate matter by 82 per cent and oxides of nitrogen (NOx) by 68 per cent (as required under BS VI).
First is diesel particulate filter (DPF), a device designed to remove diesel particulate matter from the exhaust gas of a diesel engine. There’s selective catalytic reduction (SCR) and exhaust gas re-circulation (EGR), which is for NOx reduction. SCR is a process that uses a catalyst to convert NOx in exhaust gases to nitrogen and water, which are then released into the air.
In EGR, the engine re-circulates a portion of the exhaust gas back to the engine cylinders depriving it of certain amount of oxygen thereby leading to lower temperature burn. This reduces NOx emissions, but produces more PM, which is reduced using diesel oxidation catalyst (DOC) and particulate filter. These are many other components that will go into making of BS VI vehicle. We are looking at expanding accordingly.
Today customers look at overall cost of ownership (TCO). How is JBM approaching this concept?
Total cost of ownership is an important consideration in India, irrespective of what a consumer is buying. A vehicle owner incurs the cost of vehicle, fuel, and maintenance. Armed with advanced technologies, auto manufacturers exercise strict control over the cost of components while improving product quality to ensure lesser rounds to workshops are required for maintenance and component replacements.
JBM Group implements modern technologies for production and logistics management while latest management practices are used for management of production lines, logistics and finances. We have managed to progressively reduce our costs and improve on quality, leaving a good margin for our customers (OEMs) that gets passed on to their customers (end users of vehicles).
JBM has been involved in many JVs. How has the group benefited from this strategy?
Manufacturing of auto components and buses involves a lot of stages from designing to actual manufacturing. In a competitive business environment, one has to keep costs to the minimal to adhere to the concept of total cost of ownership. That would not have been possible had we relied on third parties. So we took a conscious decision to form joint ventures with global firms who are experts in their fields. That’s how our associations with Arcelor Mittal, Cornaglia, Daiwa, Solaris Bus and Coach, etc came into effect and we could attain the growth prospects of the sector.
To make critical parts and components, auto industry still has to depend on overseas technology. Do you think there is a need to focus on developing IP in India in the auto industry?
Yes there are areas where one has to source the technology from abroad but there are multiple products which are currently being developed indigenously. Companies are investing in research and development for further improvements in this area. With the government’s focus on Make in India, even the global companies are setting up their factories in India. So, there is an interest in developing intellectual property in the country. Having said that there is scope for higher investments in research. We also need to promote talent from premier institutions like IITs to enable them stay in the country and innovate.
Government plans to allow sale of only electric vehicles by 2030. What impact it will have on the auto component industry in India?
This is a paradigm shift for automobile industry - a revolution of sorts. The whole ecosystem would change in favour of electric technology. For government, it is a way to drive in a clean mode of transport while the industry is gung ho about the business prospects of the move. This will also ensure better utilisation of fossil fuel for industrial purposes while checking the balance of payment problem for the economy as we would need to import lesser crude oil. It goes without saying there will cleaner air in cities choking for oxygen at present.
As a component supplier, how are you planning to tap EVs opportunity?
I will answer this question as an OEM as we are the first movers in developing 100 per cent electric bus in the country. We have tied up with Europe’s major manufacturer of electric bus and coaches, Solaris Bus and Coach SA, for the purpose. The move will ensure we benefit from the electric revolution in the country. As far as component division is concerned, we will add new product line in our portfolio to meet the demand of our customers.
What is the latest update on your electric bus venture?
We are in the final stages of developing India’s first all-electric bus. For this, we are in advance stages of talks with potential customers. What sets us apart from all other players in electric vehicle is the fact that we are offering a complete suite of products consisting of bus, battery and charging ecosystem. This is a unique offering in the market when other players are trying to make an in-road to develop a solution either in bus, battery or charging stations. Our customers would not have to look for any other vendor as they would get everything under one roof.
What are your long-term and short-term growth plans for JBM Group?
We are working on a long-term strategy of increasing our footprint in green technology consisting of e-mobility, generation of power from solar energy and from city waste. We are looking at other areas of renewables too. You can expect to hear from us soon on that too.