Venkatachari Jagannathan, reports on the ambitious plans of Danfoss Industries to emerge as a major global support and sourcing arm for its Danish parent Danfoss AS.

Chennai: Bhalchandra Pasupathy, 46, director and president, Danfoss Industries Pvt Ltd, is in the midst of spearheading major expansion.

A chartered and cost accountant with a management degree, Pasupathy is not only in the process of expanding the capacity but also transforming the Indian operations into a major global support and sourcing base for the Danish parent Danfoss AS.

The Danish group produces mechanical and electronic products and controls for refrigeration, air-conditioning, heating, motion controls, industrial automation, water controls, high pressure water solutions and comfort panels.

Its Indian subsidiary, Danfoss Industries, focuses mainly on refrigeration, air conditioning components, motion control, heating devices and water valves. Till date it has invested $ 6 million with more investments are in thepipe line.

Pasupathy explains, "We are planning a new facility for manufacturing refrigeration and air-conditioning controls and water valves. The proposed investment, capacity and location are under consideration." The company is also looking at Pune as a production base.

After establishing its presence in the refrigeration and air-conditioning and motion control devices market, Danfoss Industries is looking at the water valves business in India. During the current fiscal, the water valves business is expected to fetch around Rs4 crore.

India as a sourcing base
The Danish group is looking at India to source castings for its water valves and also for components for refrigeration and air-conditioning divisions.

After sales, service support and application engineering are the other areas that the parent group wants to strengthen to service clients in other Asian markets from India. This is because servicing is more efficient since the time zones are similar. What is unique about the Danfoss customer service is that it is seamlessly integrated across the globe.

"If for any reason our support centre in US is not in a position to attend to a customer call, then the call is diverted to another Danfoss support centre somewhere else in the world," says Pasupathy.

The Indian subsidiary has engaged US IT giant Accenture to develop software for its needs. "The software is developed under our guidance and supervision," remarks Pasupathy. Danfoss Industries also develops architectural and programming solutions. While the company's business consultants provide architectural solutions, Accenture executes programming solutions.

In line with its global implementation, Danfoss Industries too went live with SAP last August. "We will shortly migrate to SAP's latest version," he explains and adds, "We are also looking at implementing customer relationship management (CRM) solutions."

Closing last fiscal with a turnover of Rs108 crore, Danfoss Industries is hoping to do a turnover of Rs180 crore this year. According to Pasupathy, "60 per cent of our turnover is from the refrigeration and air-conditioning division. The company is profitable."

Refrigeration and air-conditioning markets heating up
Speaking about the refrigeration and air conditioning division, he says, "Apart from supplying to the major players in the commercial air-conditioning and refrigeration segment, we also supply to installers, original equipment manufacturers and small players." The company has tied up with Blue Star to provide heat ventilation solutions.

The booming commercial real estate market - shopping malls, software development parks and retail shops - has heated up the demand for the company's air-conditioning products.

On the other hand the company's motion controls division is contributing 40 per cent of the top line is also logging impressive growth rate of 18 per cent. The motion control devices are used in textiles, sugar, paper, chemicals, metro railways, food and beverage and heat appliance industries.

Says regional vice president, Motion Control, Asia Pacific Region P Ravichandran, "Thanks to the funding from the technology upgradation fund (TUF) textile units are modernising their operations. Similarly in the post quota system Indian textile units are going up in the value chain from yarn manufacturers to cloth makers resulting in increased demand for our products."

The other major market for the company is the sugar mills sector that uses low-voltage DC motors. "In India there are around 350 sugar mills and each mill has around 8 to 16 such motors. Switching over to AC motors would help these mills reduce power consumption."

Another growth area is the Rs1,000 crore motion controls market of which the share of the organised sector is Rs800 crore. "The sector is fragmented; the top five players hold around 50 per cent of the market while the rest is shared by around 800 small manufacturers," remarks Ravichandran.

According to Ravichandran, Danfoss India palns to emerge the market leader in the low-voltage drive market in two years. "We have two strategies. The first one is to target the lower end of the market with low- price, high-performance products."

Its new product Realty Micro, due to be launched shortly, has been designed mainly with this strategy. "On the higher end we have pushed our power size from 500 kilowatt to 1.2 MW."

To sustain its push to expand its markets, Danfoss India is also expanding its dealer network.

Recently Danfoss Industries signed signed a contract with the Pune-based KPIT for undertaking research and development in the field of motion control devices. The company is also on the look out for striking new partnerships with institutions of higher education like the Indian Institute of Science (IISC) Bangalore, Indian Institute of Technology (IIT).