Euro 8 billion German auto component major Brose India Automotive Systems is exploring joint ventures, merger & acquisitions and partnerships to accelerate its India footprint.
Dr Philipp Schramm, Brose’s Executive VP, Commercial Administration, stated that his company, although open to it, will be selective and focus on “smart and wise moves”.
He did not specify a defined “war chest” or budget for investments, stating that it will depend on the specific target and opportunity. The focus is on finding the right fit rather than just deploying capital, the top executive explained.
Schramm’s strategy has its roots in Brose’s long history, wherein it has had successful joint ventures with family-owned companies in South Africa and Turkey, and is exploring similar opportunities in the Western world. He emphasized the importance of aligning with the growth and value development mindset of these family-owned companies.
“So we see benefits of growing together, because there’s a similar mindset behind,” Schramm explained, before adding that he is looking to support its Indian operations to make more money.
Schramm emphasised that Brose, so far, has grown organically in India.However, the need now is to make “bolder decisions” and take the next step in the market.
The push for expansion and profitability for Brose India comes even as the company has been facing headwinds such as slowdown in demand and regulatory challenges since the pandemic.
The company’s revenue in 2023 . stood at around Euro 45 million (approximately Rs 400.5 crore). The growth seems significant ramp up over previous years, when Brose could generate just about Rs 226.69 crore in FY2022 with a net profit of Rs 4.01 crore. Likewise, the revenues were Rs 147.65 crore with Rs 8.22 crore; Rs 191.30 crore with Rs 15.80 crore in FY2021 and FY2020 respectively. However, the revenues from pre-Covid-19 days were much better.
Brose India reported Rs 221.16 crore with Rs 23.24 crore in net profit in FY2019. Similarly, the revenue stood at Rs 232.23 crore with Rs 31.93 crore in FY2018.
The move by Brose top leadership team to reenergise its operations in India aligns with the Group’s broader global strategy, which saw a turnover of 8 billion euros in 2023 and is projected to reach 8.3 billion euros this year.
The company has restructured its overall operations, including that of India, to align with the Group’s global functioning.
Launching new products:
In India, Brose offers a wide range of products, including window regulators, seat adjusters, and door modules, among others
Brose India’s strategy revolves around introducing new, high-demand products that cater to the evolving needs of the Indian automotive market. Schramm highlighted that the company is betting big on electric power liftgates and motorized retractors, especially as SUVs—ideal for such advanced features—are rapidly gaining popularity in the country.
“We have won orders from new customers in India due to increasing consumer demand for these features,” Schramm noted, reflecting a broader market shift towards enhanced vehicle technologies.
Moreover, the company is eyeing the burgeoning electric two-wheeler segment, a market that offers substantial growth potential given India’s status as the largest two-wheeler market globally.
Brose has developed a specific drive unit for electric two-wheelers, providing the motor, power electronics, and control units, with most production and supply chains localized in India. Schramm emphasized the importance of this development, stating, “This is a significant opportunity for Brose, as the electric two-wheeler market is expected to grow exponentially in the coming years.”
The Brose top executive’s emphasis on significance of electric two wheeler segment underlines the fact that the company is a supplier of electric drivetrain to Hero Motocorp’s e-two wheeler Vida.
The role in India in Brose’s global vision
India is more than just a sales market for Brose; it’s a vital production and development hub. Brose India employs over 600 engineers and software developers in India, combining development, production, and administration at its Pune facility. Beyond serving local OEMs, the Indian team also supports Brose’s global operations in areas like IT and electronics.
“India is a cornerstone of our global operations,” added Schramm.
The comments from Schramm, should be seen in the context of India emerging as among few major countries outside of China, where the pace of automotive sales continues to grow. In contrast , Europe, Japan and other matured markets have been witnessing shrinking demand over the past few years.
One of the key insights Schramm shared was about the unique demands of Indian OEMs, which he described, at times, as more stringent compared to their European or US counterparts. Indian automakers prioritize rapid technological advancements and shorter development timelines, requiring suppliers like Brose to be agile and innovative. To meet these demands, Brose India has streamlined its business processes, accelerated its development cycles, and tailored products to local market needs, especially in motors and electronics.
According to Schramm, there is a need to move away from the mindset of seeing India as just a “low-cost location” or “shared service center”. Instead, the focus is on valuing the Indian colleagues as trusted, valuable contributors.
Even as the company is taking efforts to expand its business in India, Schramm is of the view that the country’s regulatory maneuvering at times gets challenging and efforts are needed to iron that out.
By focusing on high-demand products, leveraging its strong engineering capabilities, and adapting to the unique requirements of Indian OEMs, Brose is looking to capitalize on the country’s substantial growth potential. As India’s automotive sector continues to evolve, Brose’s efforts towards innovation and localization may help it endure success in this dynamic market.