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For Carraro, India remains a key component despite slowdown woes

Murali Gopalan | Updated on November 21, 2019 Published on November 21, 2019

Carraro’s hybrid tractor

This is auto-parts maker’s second largest market and tipped to be No 1 in the next five years

There is something quite endearing about Mario Carraro. The nonagenarian smiles good-naturedly when asked to go down memory lane.

The group that he founded decades ago bears his surname and recently completed 20 years in India. “When I began dreaming of doing a business in India, this was a country known for brands such as Gandhi and Nehru,” reminiscences Carraro. Today, it supplies axles and transmissions for agricultural/construction equipment applications to a host of customers.

The founder is clearly pleased about the fact that products are shipped out of the Ranjangaon plant near Pune to Italy. India, he says, is the second headquarters for Carraro after Italy. After all, it contributes to 17 per cent its revenue making it the second largest after Europe.

As Carraro fondly adds, the Indian operations have an Italian DNA. He may be 90 but is only too aware of the challenges ahead that the young workforce in India needs to be prepared for in the years to come.

“I also give a lot of importance to gender diversity. We need more women to be part of the workforce,” says Carraro. While pointing out that Indian capabilities are at par with Italy, he is still keen on “pushing for greater innovation”.

Asked if he would like to see more Indian cerebral competence at the global level, the founder points out to Balaji Gopalan, Managing Director of Carraro India. “Balaji is an example; he looks after China in addition to the responsibilities here,” says Carraro.

Key markets

While Indians are offered key responsibilities in Italy, they opt for short-term assignments since it is not the easiest of tasks relocating overseas while leaving their families behind. Clearly, India and China are important markets even while the current slowdown is a bit of a concern.

“Last year’s numbers were higher than what we projected. So it evens out during a down period which means there is really no change in our projections for India and China,” says Carraro. Gopalan then chips in to add that the operations here meet the needs of Europe and the Americas.

The importance of India has also been articulated by Enrico Carraro, Chairman, in the Annual Review where he says 2018 was “unquestionably the year of India” which became the Group’s top destination market with over €100 million in local sales, surpassing North America and “confirming its status as the real engine of our growth”.

Mario Carraro needs to leave while Alessandro Gigli, Purchasing & Information Technology Director, quickly takes his place. According to him, the group is betting big in the electric mobility space and had displayed its hybrid tractor at the Eima fair in Italy last year.

Yet, bringing this model to India is not on the radar since the Centre still needs to formulate a policy that will encourage manufacturers like Carraro to contemplate such offerings. “We are ready anytime the gates are thrown open here. If there is a market and policy, we are ready to go,” reiterates Gigli.

He is quick to clarify though that it is not Carraro’s intent to compete with its tractor customers. The hybrid will be considered for India only if it is in a niche segment that does not end up grabbing a share of the existing tractor pie.

Carraro is also developing GPS-enabled autonomous tractors for farms in Europe. The chances of these coming to India are quite remote given the diverse ground realities vis-a-vis Europe both in terms of age demographics and labour costs.

At present, India is one of the largest sourcing hubs for Carraro globally and only the second after Italy. According to Gigli, it is is on track to becoming the largest over the next five years. “The opportunities here are dramatically higher than other parts of the world in areas like agriculture and construction equipment,” he says.

Carraro operates out of a single manufacturing location near Pune though this model could change in the future. “In my mind, I see smaller distribution and service hubs that can support the customer. You could have one big Carraro here and perhaps two smaller units in other locations,” he continues. Pune will, therefore, end up becoming the mother plant that supplies parts elsewhere to these hubs.

“This is what I think will happen since big plants are too costly for the future and you need something faster to service the market,” says Gigli while drawing the example of the Amazon business model .

Potential for e-mobility

And even while electric mobility is in its early stages, he believes that it has the potential to alter the landscape since it is completely different from the traditional mechanical system.

”I believe that if you are not fast enough to react, you had better not venture into this space,” adds Gigli.

He is confident that Carraro’s new generation of employees will play a big role in this transition where the future will bring “a change in thinking from inside”. After all, he reasons, GenNext is a lot smarter with technology, big data and so on.

This is also where India will have a big role to play with its technological capabilities. The Carraro team here is already working on a host of global projects and Gigli says constant efforts are on to “pushing them to understand/travel around the Carraro universe”.

There are constant talk sessions happening with counterparts in Italy who come down to “teach and learn something” in the process. As he puts it, “We don’t need a genius coming from Italy but prefer interactions instead.”

Published on November 21, 2019
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