Danfoss Industries grows 16%, but finds indigenisation a challenge

ravi Problem is in developing a vendor base for electronic components, says firm’s president

- 04 March 2018 By THE HINDU

Problem is in developing a vendor base for electronic components, says firm’s president 

Danfoss Industries, which manufactures components, such as control valves and drives for cooling and refrigeration industry, saw its domestic business grow 16 per cent to 1,120 crore in 2017. In addition, the company supplied products worth 560 crore to Danfoss companies elsewhere in the world.

Coming after 14 per cent growth in 2016, on the back of healthy orders from the cold chain companies, Danfoss finds its operations in India, where it has been present since 2002, doing satisfactorily, but Danfoss’s President Ravichandran Purushothaman says a big challenge is indigenisation. Although its locally bought components grew to 24 per cent from 20 per cent in the last one year, and the company aims to achieve 50 per cent by 2020, building a local supply chain remains sluggish.

While the company is able to buy mechanical components such as castings and forgings, the problem is in developing a vendor base for electronic components, Purushotaman said.

He said the company produces 18 different products, in four of which it has achieved 99 per cent indigenisation. But the rest requires very specialised skill sets. The products will have to function in a range of temperatures that goes from minus 30 degrees to 20 degrees.

Heart of biz ‘with us’ 

Still, the company sees good business prospects in India because “commercial airconditioning penetration is only 10 per cent” in India. Danfoss has a big play in preservation of fruits and vegetables. “The heart of the cold chain is with us,” he said.

The demand for ‘cold rooms’ is growing 14 per cent annually, but Danfoss finds what it supplies to this segment growing 25 per cent. Growing consumption, mainly of fruits, and e-commerce and driving this business, Purushothaman said. India has cold room capacity to hold 110 million tonnes of products, which is owned by 7,500-odd companies. Around 65 per cent of the stuff stored in cold rooms are onions and potatoes.

Purushothaman said India also contributed substantially to Danfoss’s global R&D, which filed “a patent a day” in 2018. One of the products developed in India was a component that goes into units that fruit and vegetable boxes cool — this component is so small that the size of the box shrinks so much that it could be used by street vendors.

This article was published on THE HINDU on March 04, 2018.

 

 

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