Transforming for The Future

In July 2021 Kirloskar Oil Engines, Kirloskar Chillers, Kirloskar Pneumatic, Kirloskar Ferrous Industries and Kirloskar Industries decided to refresh each of their business visions. The refreshed vision was aligned with the need to be future-ready in a constantly evolving world and stemmed from the desire to enhance the experience throughout the customer journey. We sat down virtually with Mr Rahul Kirloskar, Executive Chairman, Kirloskar Pneumatic and had a tête-à-tête with him - as he took us through the future plans and vision of the group of companies.

Please tell us briefly about your group of companies, their product offerings and the sectors to which they cater to as well as manufacturing capacities?

Kirloskar Oil Engines Ltd is a leader in the manufacturing of diesel engines, agricultural pump sets and generator sets with a sizable presence in international markets. Kirloskar Oil Engines Ltd has a strong distribution network throughout the Middle East and Africa with offices in Dubai, South Africa and Kenya and representatives in Nigeria. The company specialises in manufacturing air-cooled and water-cooled engines, diesel generator sets across a wide range of power outputs (2.1 kW to 5200 kVA), diesel engines, diesel and electric pump sets, power tillers, specialised engines for fishing, among others. The research and engineering Facility of Kirloskar Oil Engines Ltd ensures all engines and diesel generator sets are certified for stringent noise and exhaust emission norms. The company also offers engines that operate on alternative fuels such as bio-diesel, natural gas, biogas and straight vegetable oil. In the power generation segment, Kirloskar Oil Engines Ltd is one of the largest selling genset brands in the world whereas the newly-entered railways power car business has already become the second largest player fuelling the growth of Indian Railways.

Kirloskar Chillers Private Ltd has been at the forefront of HVAC technology in India since it commenced operations in 1996. For more than a decade after inception, it was the only company in India to manufacture centrifugal and screw chillers. Kirloskar Chillers Private Ltd.'s products are designed for a wide range of operating conditions and applications, from comfort air-conditioning to process cooling as well as low-temperature brine applications. In 2006, Kirloskar Chillers Private Ltd. was the first Indian chiller manufacturer to acquire AHRI certification for its products and the first to establish an AHRI-certified test facility in 2008. The company has been a pioneer in ozone-safe and low-GWP, eco-friendly technologies in India.

Kirloskar Pneumatic Company Ltd -Founded in 1958, Kirloskar Pneumatic Company Ltd. is the market leader in CNG systems and oil and gas refrigeration in India, enjoying a market share of over 60 per cent in both business segments. The company has a wide range of offerings that include air compressors, refrigeration compressors and systems, process gas systems, vapour absorption chillers and industrial gear boxes. It serves a range of sectors like oil and gas, steel, cement, cold chains, food and beverages, pharmaceuticals, railways, defence and marine. Kirloskar Pneumatic Company Ltd. has established technology partnerships with leading global companies. It is also steadily enhancing its leadership position in the gas compression segment while being the world's largest manufacturer of industrial gas compressors.

Kirloskar Ferrous Industries Ltd

Founded in 1991, Kirloskar Ferrous Industries Ltd. is India's largest castings and pig iron manufacturer. The company caters to various industry sectors, such as tractors, automobiles and diesel engines. The manufacturing facilities at Koppal, Hiriyur and Solapur have the unique capability of producing a range of products that include grey iron castings up to 300-kg pieces. The company also produces various grades of pig iron such as SG iron grade, basic steel grade and foundry grade. The company is also expanding its manufacturing capacities in pig iron and casting. The company has introduced a 3D printing facility, enabling fast development of new products and capability ramp-ups and has also started machining castings and added a coke manufacturing facility with waste-heat recovery power to be used in the foundry.

Kirloskar Industries Ltd

Kirloskar Industries Ltd is a public limited company trading on the Bombay Stock Exchange and the National Stock Exchange. The company was incorporated in 1978 and is engaged in wind power generation and has diversified into real estate development activities through its wholly owned subsidiary, Avante Spaces. The company also invests in securities of group companies and has rented out commercial spaces.

Avante Spaces, the real estate business, a subsidiary of Kirloskar Industries, has embarked on its first project which is a mixed-development offering that includes retail and commercial space in smart buildings. It is exploring different models of real estate development keeping user-centric and future-forward principles in mind.

Arka Fincap, a non-deposit taking systemically important NBFC, is a wholly-owned subsidiary of Kirloskar Oil Engines Ltd. Arka Fincap is a professionally managed company focused on providing structured term financing solutions to corporates, real estate and loans to micro, small and medium-sized enterprise borrowers. The company was started three and half years ago.

Please tell us about the large investments and growth strategies planned for all business lines in the coming years?

Among the new consumer-facing businesses, there will be significant investment in the realty business Avante Spaces and Arka Fincap, the non-banking finance company (NBFC). Avante Spaces is developing the first of its land parcels based on customer-centric and future-forward principles. The business is looking at a mixed-development offering that includes retail and commercial space in smart buildings.

Arka Fincap was established last year as a subsidiary of Kirloskar Oil Engines and began operations with a seed capital of Rs 1,000 crore. It is focusing on structured term financing solutions for corporations and loans to MSME borrowers and the real estate sector. In three years, Arka Fincap will expand into retail lending and consumer finance.

Avante Spaces is our first real estate project. The development potential of our first land parcel is about 2 million square feet and it will be ready by 2024. At Kirloskar Ferrous, we are setting up phase 2 coke oven and power plants to achieve self-sufficiency and cost reduction for the present facilities. At Arka Fincap, our NBFC setup, we had started off with a commitment to invest Rs 1,000 crore as seed capital over a period of four years. We have already infused about Rs 800 crore in it. We plan to invest the rest over the next 12 months or so.

Please explain the infusion of industry 4.0 technologies such as digitisation and 3D printing into your business and how is this transforming the way you manufacture, the way you process, etc.?

We have adopted many new-age tech solutions. These include 3D printing, artificial intelligence (AI), Industry 4.0, IoT-powered gensets (over 50,000 already supplied), customer service, remote monitoring, digital transformation in after sales service with the help of EFSR, among others. We leveraged technology to equip our employees with better tools, seamless and transparent flow of information, and learnings, along with AI-driven e-learning systems that can be accessed from anywhere in the world.

This, coupled with the right policies and processes, will allow our people to grow vertically and horizontally within companies, ensuring their learnings as well as their potential to deliver are limitless.

Kirloskar is on a transformation journey - with a vision now aligned to be being future-ready. Please explain this ethos and the need to transform. Especially keeping in mind, the current market scenario, wherein survival and adaption is the general norm?

Our businesses have always been agile and unafraid to transform in step with a transforming world. So, the refreshed vision is aligned with the need to be future-ready in a constantly evolving world and stems from the desire to enhance the experience throughout the customer journey.

The exercise involves not just a revitalisation of the businesses from robust, engineering-led firms to solution providers that lead today's transformed industrial landscape, but also being more customer-centric than ever before.

It is very much in line with our founder's vision of ensuring that all products are a step ahead of time, the companies will constantly innovate with an eye on the future.

So, it wasn't tough once we decided to move ahead.

We were very clear about the values we would adhere to: Innovative thinking, Empathy, Collaboration, Integrity, Excellence and Value-creation. These will be deeply entrenched in the operations going forward. In the past, we were more B2B. About four or five years ago, we started our journey towards being a digital company - we were probably one of the first companies to go digital. We took this decision because we were a 130-year-old group and we needed to move with the times.

Customer focus will form the core of your new mission. Kindly explain the shift.

To ensure that all products are a step ahead of time, the companies will constantly innovate with an eye on the future. The expanded vision implies a promise to all customers that their dreams can now be truly limitless and will be fulfilled. We have always taken pride in ourselves for the fact that we probably have the best service networks across the country.

The customer is at the heart of everything we do, and we constantly evolve to exceed their expectations. We are now expanding our horizons and have made leaps from just products to solutions, to customer centricity and now to digital architecture. This change is reflective of our new philosophy to create better lives, better opportunities and a better tomorrow for our customers and for society.

Kirloskar Industries reported consolidated net profit of Rs 72.73 crore in the June 2021 quarter. Please tell us in detail how the numbers have been in the past financial year, and your expectations of the coming quarter/year?

We cannot compare the results from last year because of the pandemic and our facilities being shut and we reported a loss of Rs 6-7 crore. We are hopeful to continue with the good performance of the company made in the first quarter.

How important is sustainability to your business ethos? What steps is the group taking towards incorporating sustainability into its products and services?

We are focused on creating maximum value for the customer through new businesses, new offerings and also through our strong, committed sustainability focus - green energy, new technology, community efforts.

Our companies are responding to climate change. The Kagal plant, for example, is carbon-neutral. There is a waste heat recovery plant at KFIL and we have invested in solar energy with a total of approximately 20 MW of solar power across the group to reduce our dependence on grid power.

We believe business and environmental impact are correlated. So, we are imbibing renewable energy in our attempt to create a truly sustainable business with the use of solar power at our manufacturing facilities. We are moving towards greener and energy efficient technologies. This includes compliance with international standards in energy efficiency from Bharat Stage IV emissions to Euro VI and low GWP.

Tell us more about the new vision and how the company is planning to transform

A refreshed brand identity and colours have been adopted as a part of this exercise. While the logo has elements of human-centricity and future-readiness, the colours allude to the legacy that the 130-year-old name carries, and the years put in to fulfil the dreams of those it has touched. The values of innovative thinking, empathy, collaboration, integrity, excellence and value-creation will be deeply entrenched in the operations going forward.

The refreshed logo symbolises our transformation and the journey towards a ‘Limitless' future. The ‘i' combines a human icon and a forward-looking arrow that shows the progression and growth of the people impacted. It also indicates that the companies are future-ready and will always strive to satisfy the needs of the customers. The inspiration was drawn from the colour copper that naturally evolves every day. Hence, the copper patina colour palette has been used - from shiny browns, to darker browns, blues and finally greens. Teal is the final stage of this patina, that protects every element within it. This is the inspiration behind the colours of the identity you see today.

To strengthen their businesses, the companies are also expanding their leadership. Industry veterans that have joined in the recent past include Mahesh Chhabria at Kirloskar Industries, Vimal Bhandari at Arka Fincap, Vinesh Jairath for the real estate business and K Srinivasan at Kirloskar Pneumatic. Industry veterans RV Gumaste, Sanjeev Nimkar and Avinash Manjul continue to lead Kirloskar Ferrous Industries, Kirloskar Oil Engines and Kirloskar Chillers respectively.