Telma came to India in 1994 to 2005 basically as an imported product auxiliary braking system on well knows names like Volvo, Scania, Mercedes Benz & MAN. In 2005 the volumes were significant as well as the market parameters showed us that there were more demands as well as requirement to be local in India. Next five years in India shows tremendous opportunity for Telma, not only the growth within the bus market or growth of Economy in terms of GDP%. The opportunity is mainly there because of the awareness of safety, specifically in the transportation area in the city, Stop & Go scenario of the city, low speed scenario of 14 bigger cities here in India are causing growth potential for Telma.
The OEMs are releasing this growth potential & end users are requesting more & more justification of life cycle cost as well as the Return on Investment (ROI). Brake life is one part of the product, aspect of ROI is more linked to revenue, downtime, safety aspects as well as the image for the fleet.
Incredible India is the slogan used for tourism but I think it as an effect on the application of retarders, so we have not seen for instances the road conditions as well as the specific average peak conditions in the cities like anywhere else in the world. That’s makes it for Telma absolutely required to study this application on a trial basis with our customer. We have seen with specific customers like Parveen, ABT Travels as well as Ashok Leyland & TATA that the Telma retarder has an significant benefits over any of the other competitive technology like for instance oil retarders or retarders that has to be cooled by water. This is again making it us unique compared to rest of the retarders.
Telma group has strategic of localization once we reach certain volumes. This is a very typical business model used in western countries to amortize any investment. In the case of India come up back again to the difference of culture as well as unique position that India holds within vehicle Industries & our requirement is not just linked to volume, it is also linked with the fact that the VOEMs of this world as well as the local OEMs, domestic OEMs here in India require us as a tier 1 supplier of auxiliary braking system to be present in India. Our target is to be fully present & localized by end 2014, which requires us to take now the necessary steps with the supplier chain as well as to make the required base investment in order to start our plant & facility in the neighbourhood of Chennai. Why we go for Chennai, we felt that the culture in the south as well as the quality of government ships, engineers is meeting our expectations & it was therefore the choice of our shareholders to situate ourselves in the facility of Chennai.