ZF CV Control System India lines up capex of Rs 250 crore till FY24; looks to improve content per vehicle in EVs

Commercial vehicle braking systems manufacturer ZF CV Control System India (formerly Wabco India) will invest Rs 250 crore till FY24 as part of its capital expenditure plan. The investment will go towards capitalisation of its new Oragadam facility in Tamil Nadu and ramping up its electric vehicle (EV) parts portfolio. 
In March, the company acquired a 44-acre site on Chennai’s manufacturing corridor Oragadam to manufacture advanced braking system parts along with other new products from its international portfolio. 
“We will be investing about Rs 250 crore as capex for FY23 and FY24. Out of this, around Rs 100 crore is expected to be spent in the ongoing financial year while for FY24 an additional Rs 150 crore will be added for the capitalisation of new Oragadam facility,” P Kaniappan, Managing Director, ZF CV Control Systems India said. He further stated that the Phase-I of the construction of the new facility is already underway and will be completed by Q3FY24.
 
Focus on improving content per vehicle
The Chennai-based auto component maker is also betting high on getting new business by entering new product lines, positioning itself in advanced technology areas and increasing the content per vehicle in CVs and bus space.  
It is also focusing on the transition to electric vehicles (EV) and getting into products like electric compressor and electronic stability control systems for the electric powertrain.
ZF has already developed intelligent tracking solutions that complies with Automotive Industry Standard (AIS) 140 and mainly used to provide tracking service mandated for passenger commercial vehicle system safety from FY24.
“As we progress, we see significant expansion of digital systems into commercial vehicles aided by the adoption of AIS 140 norms. We have also installed its digital connectivity solution on the fleet of a large CV OEM and are witnessing acceptance and adoption of the solution to provide truck management and better e- toll solution, enhancing vehicle uptime and reducing TCO (total cost of ownership) for fleet operators,” Kaniappan added. 
The company has said that one key Indian commercial vehicle OEM has already onboarded its modular and fully automated Scalar Fleet Orchestration Platform, launched globally in August 2022. “Currently, ZFI has 1,07,000 vehicles connected on the digital connectivity platform of which 40,000 vehicles are connected on the Scalar platform,” the MD said. 
In addition, the company holds a dominant share of over 85 percent in medium and heavy trucks braking solutions. It has also started supplying compressors for EV buses to leading domestic OEMs and is gearing up to supply electronic stability control systems mandated for buses from FY23.
“The improving demand for exports in intermediate and light CVs and passenger vehicles augurs well for our company to achieve portfolio diversification targets. ZFI continues to be a key beneficiary of the current CV upcycle in India, with input commodity softening and improving,” said S Rajagopal Sastry, ZFI CFO. 
On the e-mobility front, ZFI has started production of Gen 2.0 electric compressor to key OEM customers and received orders for electronic brake systems from existing customers who upgraded from anti-lock braking system (ABS).
Highlighting on content per vehicle, the company said electric compressor stands at Rs 80,000 per unit, EBS at Rs 65,000 per unit for EVs, ABS at Rs 15,000 per unit, ESC at Rs 20,000 per unit on basic system and up to Rs 35,000-Rs 40,000 per unit for the bus segment.
 
Robust financial performance 
In the Q2FY23, the company reported 113 percent jump in its consolidated net profit at Rs 68.84 crore as compared to Rs 32.25 crore in the same quarter year ago on the back of sales revival in the commercial vehicle industry. Its total income for Q2FY23 also grew to Rs 805 crore as compared to Rs 624.13 core in the same period year ago. 
During the quarter under review, the company’s EBITDA margin stood at 13.6 percent, up 120bps Q-o-Q, and was largely driven by 150 bps gross margin improvement led by favourable movement of input commodities. At present, the product mix of the company stood at 15 percent for passenger cars and 85 percent for CVs.