A technology that can make passenger buses lighter and more efficient comes to India in its search for mainstream acceptance
Golf enthusiast P.K.C. Bose found himself in a bunker in late 2008. His swing for a deal with Tata Motors, India’s largest maker of commercial vehicles, had just got lost in the dogleg. He had had no illusion that it would be an easy job. As CEO and managing director of Saertex India, he wanted to get bus operators to move away from the gas-guzzling steel-bodied vehicles to a more modern, environment-friendly alternative — buses made from fibre-reinforced plastic composites. For that to happen, manufacturers like Tata must first embrace the technology and invest in new tools. Tata had shown interest but later decided against tying up with Saertex citing other technology partnerships.
For a while, the cause seemed lost, but one cold morning at the Delhi airport, Bose scored a hole-in-one.
R. Seshasayee, the technology-loving (former) CEO of Ashok Leyland, happened to pass through the airport that day. Bose was there too. He introduced himself and his two German colleagues. Seshasayee responded with enthusiasm when told about the plan to bring the composites technology to India’s bus sector. He invited Bose and his team to make a presentation to the senior officials at Ashok Leyland’s Chennai head office. One thing led to another and very soon, Saertex had a 500-bus deal with Leyland.
“The all-composite bus project is a very exciting one not only for us but also for India as a whole,” says Bose. For Saertex India, a little-known company with a plant in Hinjewadi near Pune and largely serving the wind turbine sector, this is a breakthrough into the automotive segment. For its German parent, it is an entry into the world’s second biggest bus market.
The idea of a composite bus is as simple as it is compelling. In the manufacture of a conventional bus, a chassis or the basic framework to hold all the parts is made with steel. Then, a body is built on it using more steel. A lot of welding goes into binding everything together. In the end, we have a very heavy product that has thousands of independent components.
On the other hand, a composite bus body is just two moulds fused together. Engines, seats and other stuff are fitted into this shell. And voila, the bus is ready. The composite is made up of a non-crimp fabric at its core — the kind of stuff that Saertex makes — with several layers of reinforcements. A composite bus is lighter, consumes less fuel and resists corrosion and damage better than steel-bodied buses. While the initial cost is higher, its maintenance is cheaper making the total cost of ownership attractive.
But the irony is that the all-composite bus is not in the mainstream anywhere in the world. In fact, it has seen wide adoption only in the US state of California. From European nations to Korea, bus operators are warming up to this technology but are yet to make large-scale commitments. Even in the US, success has not been easy. The pioneer, North American Bus Industries (NABI), had to wait for nearly a decade before it got accepted in the market.
So why is Bose trying to bring it to India?
India is on the threshold of becoming one of the hottest markets for buses in the world. Economic growth has led to a whopping increase in public transport needs in its burgeoning cities. For long, the demand was for only about 30,000 buses a year but the graph has now taken a steep turn upwards. In 2010, bus sales in India reached a record 38,000. Industry experts expect the number to reach as high as 60,000 by 2015.
Much of this demand will arise for better quality, high-tech and luxury buses. Till recently, the market was dominated by rickety, noisy buses that broke bones. In many cities, commuting was a nightmare because too many people were crammed into too few buses that were poorly maintained. Cash-strapped state-run bus corporations bought the cheapest models available and never invested in modern technology, emission reduction or passenger comfort.
All that started to change a decade ago when Swedish company Volvo brought its modern low-floor city buses. Initially, transport operators were reluctant because of the high cost but consumer demand swung overwhelmingly towards these buses. “Consider the fact that while it took only a couple of Volvo buses in a customer’s fleet in 2001 to make news, today our largest customer has over 400 coaches in his fleet and no one bats an eyelid,” says Akash Passey, managing director of Volvo Buses India. “A lot has changed in the past 10 years and things will change even faster in the next five years.”
The flip side is that India is also an incredibly difficult market to penetrate. Mindsets that favour steel-bodied buses will not change easily. Big cities are served by state-run bus corporations that are determined to keep the cost of travel low; this skews the economics of bus operations. Manufacturers will be put off by the large capital needed for the basic tooling and the lack of enthusiastic customers.
Bose has indeed taken up an extremely difficult task. But if he succeeds, India’s bus market would have seen the second biggest disruptive progress in less than a decade — after Volvo’s luxury coup.
From Mould to Sold
Despite the growth of the luxury bus segment, India remains largely a market for cheap buses priced between Rs. 7 lakh and Rs. 20 lakh. About 80-90 percent of all buses sold are in this category, says Volvo’s Passey. “If you put in the composites technology in such buses, then the initial cost of procurement will be high and it may not be immediately viable for operators,” he says.
(This story appears in the 20 May, 2011 issue of Forbes India. To visit our Archives, click here.)