In the Budget for 2011-12, Finance Minister Pranab Mukherjee has reduced excise duty on the kits that convert car engines into the hybrid ones from 10 per cent to 5 per cent. KpitCummins, the company that Mukherjee was referring to, is looking at becoming a $500-million company within the next two years, says Kishor Patil, CEO and global MD. In a conversation with Swati Garg, he says the company hopes to achieve this on the back of its hybrid technology, Revolo. Edited excerpts:
What is the Revolo concept?
With the installation of the Revolo kit any car can be converted into a plug-in hybrid within eight hours without making basic alterations in the engine, at a price point which is one-third charged by a standard original equipment manufacturer (OEM). Also, the kit gives the vehicle 40 per cent more fuel efficiency than those provided by OEMs. A standalone kit bought outside OEMs would cost $3000-5000 for cars in the '10-15 lakh range.
Will the cut in excise duty mean a drop in the kit price?
It is very early to comment as we are analyzing the impact of the duty cut. However, I definitely believe these duty concessions would make it more affordable to the end customers to opt for hybrid vehicles.
What are the manufacturing plans?
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The manufacturing facility for Revolo will become operational in the next six months. We are currently in talks with several OEMs. Given the fact that the market at present has 13 million cars that are on the road and is slated to grow five-fold to 400 million by 2050, the opportunities are endless. Also, the technology will become more relevant with stricter emission norms. In the short term, we are looking at revenues of about $100 million over the next three years.
Do you think the global crude oil price fluctuations will impact the technology?
With fuel prices witnessing continuing fluctuations, there will be progressively a greater emphasis on adoption of fuel efficient technologies in the auto sector. At any point beyond the $80 mark, hybrids would be the more affordable and attractive option. This, coupled with stricter emission norms would signify that buying patterns would change significantly; all aiding the growth of the hybrid market.
What is your take on the end of the STPI tax holiday?
We have been preparing for the end of the STPI (software technology park of India) tax holiday for a while. The move was inevitable. We have shifted our three units to special economic zone (SEZ) in the last two years. We, therefore, do not see the end of the tax haven affecting us.
Where does KpitCummins stand at present?
The company grew at a compounded annual growth rate (CAGR) of 40 per cent last year. We are making use of innovation as the key differentiator for our overall industry target. Keeping that in mind we are looking at reorienting the overall focus of the workforce, transforming each one into innovators. The larger focus will be the adoption of a non-linear model for the development of new services. We are also looking at hiring about 2,000 people in the 2011-2012. We will become a $500 million company within two years.
What are your focus verticals?
The focus will remain on three key verticals — the automotives, defense and energy and utilities. The idea is to establish leadership positions irrespective of the SAP, Oracle or embedded engineering orientation of the task. We are also looking at both organic and inorganic growth. Also, the technologies we have developed for the auto sector is applicable for defense verticals as well. One such usage was in the project unmanned vehicles we executed for the forces.
Are you looking at new geographies?
There will be an increasing reorientation in terms of the economies we target. While North America and Europe will continue to dominate, India, along with Korea, China and countries of Latin America and Eastern Europe have become important. Their share of revenues will grow from the current five per cent to 25 per cent over the next two years.
Are you looking at acquisitions, keeping inorganic growth in mind?
Acquisitions, if and when, will not be for size but for growth within the verticals we currently specialise in. Acquisition, for us, is a process of evaluation of up to 66 companies. The fund we receive from private equity investors are aimed at ensuring that cash reserves are taken care of.