ZF Commercial Vehicle Control Systems India Ltd, an arm of Germany-headquartered global auto parts supplier ZF Group, expects to sustain a double-digit growth going forward, aided by new regulations in the commercial vehicle as well as passenger vehicle segments and adoption of electric mobility, the company management indicated while launching its new multi-product factory at Oragadam near Chennai.
The new factory, ZF Group’s 19th factory in India, has come up on a 44-acre site at an investment of ₹170 crore. It will be investing another ₹30 crore in 2024. About 80 per cent of the workforce will be women in this factory. The new plant will produce advanced technology products such as EV aggregates, electric compressors, EBS (electronic braking system) and others, both for Indian as well as global markets.
The company has committed to invest ₹1,800 crore, over 10 years, at the Oragadam campus, which is expected to create job opportunities for 5000 people during this period.
Growth opportunities
“We see three major areas of growth for ZF India,” said Peter Laier, Member of the ZF Group Board of Management and Head – Commercial Vehicle Solutions and Industrial Technology.
First, as a growing automotive market, ZF group will seek to serve all customers according to their specific needs. Here, the new regulations provide an opportunity to meet customer needs. Second, with the availability of qualified and skilled engineers, ZF’s R&D operations in India will not only develop products for domestic needs but also for global needs. Third, with India already being a manufacturing hub, the group will focus on serving more overseas customers with India-built products.
The new regulations and shift to electric mobility lead to higher safety-related content per vehicle, where ZF has a range of global products to offer.
For example, ZF has already started serving bus OEMs with its electronic stability control systems. The increasing adoption of electric buses has generated demand for its products such as electric compressors (which replace mechanical systems) and EBS, which help regeneration and energy efficiency in the braking circuit, thereby improving vehicle safety and efficiency.
“We will be producing e-compressors with about 50 per cent localisation at the Oragadam unit. But in a year, we will increase it to about 70 per cent,” said P Kaniappan, Managing Director, ZF Commercial Vehicle Control Systems Ltd.
The Oragadam unit is expected to add a sales revenue of ₹100 crore this year and about ₹350 crore by next year.
Akash Passey, President, ZF Group India, said that though the company’s core business area is the commercial vehicle segment in the country, new regulations and electrification in the fast-growing SUV segment are also offering good opportunities for ZF to supply more parts. “SUVs under 4.5 metre account for about 40 per cent of sales and the government is introducing new regulations. So, there are a lot of opportunities for ZF to supply parts not just in traditional technologies, but also in the electric segment,” he added.
The company recorded a revenue of ₹3,445 crore in FY23, up from ₹2,543 crore in FY22 and 1,864 crore in FY21.