Germany-based Freudenberg Group, a multi-business conglomerate that also produces automotive components like seals, vibration control products and lubrication, is keep investing in India in various auto related businesses and R&D activities. Georg Graf, CEO, Freudenberg Regional Corporate Center India, discusses about the company’s performance and future plans in India with Jaishankar Jayaramiah of Automotive Lead.
Can you talk about your business in India and its importance ?
Worldwide we are doing business in 60 countries backed with more than 48,000 people. One of the visions of Freudenberg is to do one third of business in America, one third in Europe and one third in Asia. The time frame is not specified yet but we would like to achieve this soon. Now we are getting 22% of our revenue from Asia. Germany is still our home market with 16% share while 26% each comes from European Union (excluding Germany) and North America. India will play a major role in increasing our Asian market share in the future. We have been growing in India at the rate of 20% in the past five years. The growth in 2017 is likely to be more than 20 percent. Good thing is that we could bring similar kind of growth to our bottom line too.
How much of your Indian business comes from the automotive sector?
In 2016, the group generated sales of Rs 1,483 crore. Although we are present in several sectors, around 60 percent of Indian business comes from the automotive segment against around 40 percent worldwide. There are several products including Filtration solutions, seals, anti-vibration products, lubrication and specialty release agents made our automotive portfolio very strong.
About your investments in India?
In the past five years, we have invested around Rs 363 crore, of which the company has invested around Rs 136 crore in its facility in Mysore in Karnataka in 2013-14.
We will be investing another Rs 150 crore to set up a Greenfield facility in around 14 acres in Sipcot Industrial Estate near Chennai in Vallam Valangal area. The company will manufacture seals for auto industry in this upcoming plant. The first phase will be constructed in 2018 while the production will start in the first quarter of 2019. We will start the operations with around 100 employees, of which some will be absorbed from Freudenberg’s training institute in Nagapattinam.
How do you see the Indian auto sector in the next five years and your business?
Already a lot of foreign players have entered into India. Currently the per capita car ownership in India remains at only 20 cars per 1000 persons as compared to 60 cars per 1000 persons in China. So the auto market will grow further in the country.
Graf : More than 30 percent of our revenue is generated from young products – means the products released in the market in the past four years
As of now we hardly see any OEMs not in our clients list here. Any car has around 300 Freudenberg products. Further the country is projecting to create 100 million jobs by 2025, of which 90 million jobs will be related to auto and its allied sectors. So the growth opportunity is huge. With this, we would like to double our revenue in the next five years.
Can you elaborate about your auto related plants in India
Our Vibracoustic unit, which has production sites in Mohali and Noida, is the leading supplier of anti-vibration solutions for passenger cars and commercial vehicles. Vibracoustic develops and produces engine mounts, chassis mounts, air springs, MCU parts, isolators and dampers, serving the needs of customers like Maruti Suzuki, Tata Motors, Mahindra & Mahindra etc. Our another unit Sigma Freudenberg NOK is providing sealing solutions to the auto industry. Located in Basma, Punjab and Mohali, the company produces simmering radial shaft seals, valve stem seals, shock absorber seals, dust cover seals, Orings and gasket seals.
In addition, Freudenberg Filtration Technologies in Pune manufactures and markets a comprehensive filter programme and filtration service. Our facility in Mysore is one of our largest facilities here with production units of Kluber Lubrication, Chem-Trend and OKS, producing products like specialty lubricants and release agents.
Can you throw some light on your R&D activities?
Globally we have spent 4.3 percent of our sales in R&D in the previous year. More than 30 percent of our revenue is generated from young products – means the products released in the market in the past four years.