Sona Comstar Chairman Sunjay Kapur outlines the company's ambitious plans to transform itself from a traditional auto component maker into a technology-driven leader in the global automotive industry, focusing on electrification, innovation, and strategic investments.
05 Oct 2024 | 457 Views | By Prerna Lidhoo
As the global automotive landscape undergoes a rapid transformation, Sona Comstar's Sunjay Kapur wants to make one thing clear: the auto component maker is no longer content with merely supplying the parts that make vehicles move but wants to lead the charge into the electrified, automated future of mobility. Kapur ...
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As the global automotive landscape undergoes a rapid transformation, Sona Comstar's Sunjay Kapur wants to make one thing clear: the auto component maker is no longer content with merely supplying the parts that make vehicles move but wants to lead the charge into the electrified, automated future of mobility. Kapur believes that technology is the key to survival and growth, especially in an industry ripe for disruption: "We're a technology company, not just an auto component company,” he asserts.
The auto components manufacturer has taken several steps to realise this vision. It invests between 3.5% to 6% of its revenue in technology, substantially higher than the industry average of 0.5% to 1%.
The company plans to invest Rs 1,200 crore over the next three years to put into production a robust order book of Rs 22,600 crore, nearly Rs 18,000 crore of which is in the EV segment.
Kapur emphasizes that disruptive trends like electrification, telematics, and Advanced Driver Assistance Systems (ADAS) are creating vast opportunities. "There's a battery space that's opened up, charging infrastructure, informatics, telematics, connectivity, sensors, and ADAS," he says. "The key is going to be investment in technology."
Electrification
Sona Comstar's transformation has been rapid, driven by the opportunities opened up by electrification of the transport sector the world over. From just two plants in 2016, the company now operates 10, with its geographic reach expanding beyond India. North America accounts for 40% of its revenue, while India contributes 28% and Europe 26%. The share of EV revenue has risen from 14% in FY21 to 29% in FY24.
With an ambitious capex largely focused on EV-driven projects, Sona Comstar is positioning itself as a key player in the global shift towards cleaner transportation. "We're already supplying electrification solutions, sensors, and working in the ADAS space," Kapur said, signaling the company's readiness to play a larger role in autonomous driving technologies.
This comes at a time when globally, EV demand is seeing a correction. But Kapur sees such cycles as opportunities for reassessment and investment. "When cycles come, it's a good time to reassess, build efficiencies, and put up capacity for the future. At the end of the day, vehicles are going to sell, and the industry is going to grow," he explains.
For him, the focus is on the long-term. "We're not a quarter-to-quarter business," he says. "We're a long-term business, and the way to sustain this is by embracing disruption and making the necessary investments today."
Despite concerns like range anxiety and the high cost of lithium-ion batteries, Kapur believes that as infrastructure develops and battery prices fall, these issues will gradually diminish, unlocking the full potential of EVs.Kapur sees electrification as a lasting force in the automotive industry. "Electrification is here to stay. We want to move toward a net-zero carbon footprint, and infrastructure will get built out. We're on the right path," Kapur says.
Localisation
With global supply chains facing disruptions alongside a growing emphasis on sustainable practices, the ability to source components locally is not just a strategic advantage but a necessity. By prioritizing localisation, Sona Comstar aims to enhance its resilience, reduce dependencies, and foster innovation, while ensuring it remains competitive in an ever-changing environment. However, Kapur says that the localisation narrative needs a balanced approach. "This notion of 100% localisation is not the right way to go," he asserts. While Sona Comstar is actively working to localise key components such as electronics, semiconductors and PCBs (Printed Circuit Boards), he adds that certain imports will always be necessary, "It has to be a balance of both."
Kapur adds that it is crucial to engage with China, which remains an important player in the global automotive market. "China is a $20 billion vehicle market opportunity. We can't ignore that," he notes. Despite challenges like tariffs, Chinese manufacturers continue to penetrate global markets, and Kapur believes India must strategically manage its relationship with China to maintain competitiveness.
He said that the government's Production Linked Incentive (PLI) scheme is a great way to boost local manufacturing. Earlier this year, Sona Comstar received certification under the scheme. The company had filed seven applications for different products under the PLI scheme, and it has received the certification for its first product, a hub wheel drive motor for electric two-wheelers.
With a focus on long-term sustainability and innovation, Sona Comstar is focused on emerging as a key player in the changing global automotive markets.
This feature was first published in Autocar Professional's October 1, 2024 issue