D. Murali and S.P. Srinivasarangan

Chennai: Eaton India, part of the global $13 billion diversified industrial manufacturer Eaton Corporation, forayed into India in 1999 and has since expanded its presence here to over 2000 employees.

Eaton has introduced the diesel electric hybrid power systems and is the first company to make the technology commercially available for trucks and buses. “Our hybrid customers are reporting fuel savings of 30 per cent to 60 per cent. With the growing road network in India, the impetus on improving infrastructure and the increasing concerns over environment, there is scope to make use of the technology for a more fuel efficient and safe environment around us” said Mr Shyam P. Kambeyanda, Managing Director, Eaton India during a recent interaction with Business Line.

However, he believes the technology is still far out of the reach of the masses and benefits in terms of incentives and investments are required at a state level for it to take off in a big way in India.

The company, which has entered the Indian automotive business with the recent acquisition of Kirloskar’s Engine Valves business, also expects to bring in to the Indian market technology such as ‘displacement on demand’ and ‘engine downsizing through the use of superchargers,’ with potential to directly impact the fuel economy of vehicles.

In this email interview, Mr Kambeyanda shares his thoughts on the market opportunities for Eaton and the growth drivers in India.

How would you look back at your India expansion? Are you looking at more acquisitions here?

Over the years, Eaton has emerged as a power management company with five premier businesses – electrical, hydraulics, aerospace, truck and auto. Our engineering centre in Pune has designed and developed two global products (Hitch Valve and Global Gear Pump). The greenfield manufacturing plant for truck transmissions in Ranjangaon is now fully functional. We have grown to over 2000 people.

While we entered into India by virtue of an acquisition, we have, since then, concentrated on consolidating our organic growth and creating a strong market for us. Acquisitions are part of our strategy for growth and not the only piece. They are a good way to gain fast access to technology and markets. We are open to acquisition but it has to match our business plans. Our plan as a company is to grow 10 per cent through our strategic plan cycle: We expect 6 per cent to come from organic growth (4 per cent from the markets that we serve and 2 per cent from outgrowing our end markets) and the remaining 4 per cent through acquisitions.

We are experiencing unprecedented development and high economic growth in India. Our plan is to increase the sales in Asia Pacific region to $2.5 billion by 2010, and India is an important part of the plan.

What is your view on ‘hybrid engines’? What are the opportunities for Eaton to expand on this front in India?

The world witnessed a huge upsurge in the oil prices recently and everyone talked about alternative technologies. Eaton has pioneered diesel electric hybrid power systems for commercial vehicles. We are the first company to make the technology commercially available for trucks and buses. With the growing road network in India, the impetus on improving infrastructure and the increasing concerns over environment, there is scope to make use of our technology for a more fuel efficient and safe environment around us. We are pursuing opportunities in India with OEMs and Government on this initiative.

What are the benefits of using ‘hybrid engines’?

The benefits of using hybrid technologies include improved fuel efficiency, life cycle costs, ROI (return on investment), reliability, auxiliary power, productivity, driver ease, safety, and reduced noise and emissions. Also, depending on the hybrid application deployed, our hybrid customers are reporting fuel savings of 30 per cent to 60 per cent and similar reductions in harmful emissions and particulates.

What are the drivers for this (hybrid) model to work in India?

India is investing in infrastructure which is very conducive to the types of products that Eaton manufactures. Hybrid engines definitely need some push in India, which we already see is happening, amidst rising fuel prices and growing environmental concerns. However, the technology is still far out of reach for the masses; also, benefits in terms of incentives and investments are required at a state level for us to witness the big take-off.

The state Governments or the city development boards, with their autonomy in the public transportation sector, can make a big difference by making the first move in terms of incentives that are usually at the end-user level. We are more than happy to support the Government with our technology and capability like we have done in China recently by signing an agreement to power their fleet of state-run buses.

How important is the Indian market for your automotive expansion?

India is definitely a potential high-growth market for us. The Kirloskar valve business acquisition marks the entry of our automotive business into the Indian market. Looking past engine valves, we see ourselves bringing technology such as displacement on demand, engine downsizing through the use of superchargers, which directly impacts the fuel economy of vehicles.

We also see potential for our safety products like mechanical lockers and fuel-tank valves to improve vehicle stability and meet environment safety rules related to fuel tanks. We are currently not pursuing hybrids for the automotive sector and are focusing our efforts on the commercial vehicle space.

We expect to see significant contribution from the automotive segment in the future.

What are the focus areas and growth drivers for Eaton in India?

We believe we have a diversified and balanced portfolio globally. We have a quarter of our business in the early cycle of an economy (residential and heavy truck); a quarter of our business focused on mid-cycle (hydraulics and light trucks); another quarter in a late cycle (commercial aerospace and non-residential construction); and last are the businesses that do not have a cycle globally (aftermarket, automotive globally, defence and filtration). In the future, we see a similar portfolio for us in India.

We see a strong potential for our electrical business in India as the trend can be summed up in three words: demand, quality and the environment. In our hydraulics business, we see infrastructure projects and construction space as key drivers. On the truck and commercial vehicle space, we see a trend towards heavier long-haul trucks as the infrastructure improves in India and also hybrids. In the automotive space, we see our selves as partners to the OEMs in India as they begin to develop more sophisticated engines and look towards the overseas markets for growth.

We see India as a part of our global footprint and expect our team in India to drive innovation for the domestic market and our global customers who are making plans to build engines in India.

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