Published on September 09, 2022
Even as the Indian automotive sector is growing at a brisk double-digit rate, Tata AutoComp Systems, the Tata company that provides products and services to Indian as well as global OEMs, is growing at a blistering pace of >40+ CAGR. “Last year, our revenue was USD 1.2-bn, this year it will be USD 2-bn, next year it should be USD 3-bn and for 2025, we are on course to clock USD 4-bn,” said Arvind Goel, MD & CEO of Tata AutoComp Systems (Tata AutoComp). Mr Goel was addressing TBExG’s Leadership Series EDGE Webinar ‘Embracing Technology, Accelerating Growth’ on Wednesday, September 7, 2022.
Highlighting the stellar role of technology and its game-changing impact, Mr Goel said that a notable 36% of the company’s revenue comes from new technology products and services, and while this share is expected to grow to 52% in FY24, it will soar to 64% by FY25. “Technology has emerged as a game-changer and a growth accelerator for Tata AutoComp; it is a key enabler in fulfilling Tata AutoComp’s vision of being among the top-2 auto component companies in India, by enabling mobility solutions with safe and sustainable products and services,” Mr Goel shared.
Genesis of a transformation
Back in 1995, then Chairman Ratan Tata, faced with calls by competitors to deny component supplies for Tata Motors’ Indica, established Tata AutoComp Systems as a group company to not only ensure dedicated supply of parts to Tata Motors but also to work with technologies that will push the frontiers of automotive manufacturing in the country. Over the years, while Tata AutoComp had its share of ups and downs, a landmark meeting between Mr Goel and current Chairman N Chandrasekaran four years ago changed the course of the company’s growth trajectory. “The Chairman clearly defined technology – along with scale and synergy – as being fundamental to business, and he stood firmly behind us even as we committed significant capex for new technology,” reminisced Mr Goel, adding that the sharp turn to technology paid dividends immediately and the company has already grown five-fold – from just USD 400-mn to USD 2-bn in FY23.
Today, Tata AutoComp sets the benchmark in automotive component technologies across the spectrum – from Safety & Comfort, Powertrains, Suspensions, Electric Vehicle components, Stamping, assemblies and aftermarket services. Not only are the country’s leading manufacturers like Suzuki and Hyundai seeking collaborations but also the company’s facilities across continents are supplying components to top automobile companies globally. “We are a single source supplier to majors like Daimler and Volvo, procuring orders three years in advance and enjoying a 72% market share in the prestigious North American market,” said the automotive industry stalwart, adding that Tata AutoComp currently has 51 manufacturing facilities, including two each in China and Sweden, and one each in US, Mexico, Poland and Brazil.
The e-mobility opportunity
While Tata AutoComp has a solid presence across the automotive component value chain, it enjoys a pioneering presence in the electric mobility space. “We took a leap of faith with electric mobility technologies and today we are ahead of the curve on the zero tailpipe-emission journey. The technology is changing rapidly – in the past three years, the drive-train alone has become 30% smaller as well as 30% more efficient – and we have to optimise capex allocations with global benchmarking for technological leadership,” said Mr Goel, adding that Tata AutoComp is fully aligned on electric mobility and also has a strong head start in the hydrogen fuel cell space which promises to be the fuel of the future at least for heavy commercial vehicles. Connected cars and safety norms are the two other megatrends that will drive Tata AutoComp’s growth in the years to come, even as the demand for passenger cars in India is expected to grow strongly for the next two decades. “Our focus on new technologies gives us a key competitive advantage, enabling us to gain a pioneering position vis-à-vis the conventional automotive components business, which is highly competitive” Mr Goel revealed.
6S for success
Addressing the webinar participants from across group companies, Mr Goel said that the Chairman’s 6S mantra of Supply Chain, Speed, Scale, Simplify, Synergise and Sustainability is at the core of Tata AutoComp’s business philosophy. “Synergy alone has tremendous potential to yield incremental growth. Established purely to ensure supplies for Tata Motors, Tata AutoComp is now working closely with JLR, Tata Steel, Tata Power, TCS, Tata Elxsi, Voltas, Tata Chemicals and Tata Technologies to pool synergies and explore new business opportunities,” said Mr Goel, adding that the business opportunity beyond Tata Motors is Rs 10,000-crore by FY28, which is more than the company’s entire turnover till last year. “Synergy should be a key result area for senior leadership in every group company,” the thought leader said.
Mr Goel took select questions from the participants and shared his knowledge on a range of topics, before the leadership webinar concluded on a positive and inspiring note.