Blaupunkt India’s director Pankaj Jagwani speaks on the company's growth strategy and emerging trends in the India market.
23 Jul 2016 | 13588 Views | By Shourya Harwani
Headquartered in the German city of Hildesheim, Blaupunkt is a leading global manufacturer of car radio and audio equipment which has been in India since 1996. Blaupunkt India’s director Pankaj Jagwani speaks to Shourya Harwani on the growth strategy and emerging trends in the India market.
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Headquartered in the German city of Hildesheim, Blaupunkt is a leading global manufacturer of car radio and audio equipment which has been in India since 1996. Blaupunkt India’s director Pankaj Jagwani speaks to Shourya Harwani on the growth strategy and emerging trends in the India market.
Let’s start with the origins of Blaupunkt in India.
Blaupunkt was earlier a part of the Robert Bosch Group in India, which launched the Blaupunkt brand in the country in 1996. We actually started off as the distributors for the company in India, as we were already distributors for Robert Bosch.
In 2008, Robert Bosch sold the business worldwide to Aurelius and suggested our name for the India business given our track record. So in India, we were first selected as the importer and distributor and as the business grew and we got some OEM business and aftermarket expanded.
Then we decided to take our business to the next step, which was a joint venture, which happened in 2012. So Blaupunkt India came into existence as a result of the joint venture in 2012.
How do you categorise the India business?
On the product front, there are two main divisions — the car radio and the audio division. The split for revenues between the two is 65 percent from the radio unit sales, while the rest 35 percent is from the audio business. Overall though our business is divided into three main segments: the OEM, line fitment business; the POE business and the aftermarket.
The POE business is what we call in Blaupunkt terms as the post-OEM business, where an OEM supplies our systems as post fitments or as genuine accessories. This also encompasses fitments on limited edition models launched by car manufacturers. The last segment is the pure aftermarket where we supply to our distributors who in turn sell to retailers. Then, of course, is the online channel, which falls under aftermarket.
How has the business panned out for you so far and how do you see it growing?
In the current financial year, we are set to cross Rs 100 crore in revenues for the first time. This is based on the current order book that we have in hand and it will be our best ever fiscal as well. Currently, we are not manufacturing anything in India the reason being that due to the ASEAN treaties the import duty from Malaysia is zero, where we largely import from.
Another big reason is that the main components for speakers are magnets which have to be imported from China. Given that we are not a large volume player, it makes sense for us to import our products. However, somewhere down the line for our speaker business, we will look at local manufacturing, but not in the near term.
Going forward, which are the key growth areas for Blaupunkt among the segments you outlined?
In the future, we will focus primarily on growing our POE and aftermarket businesses. In India, we are not going to focus on the OEM business. There are only two local manufacturers where car radio decisions are made in the country and those are Tata Motors and Mahindra & Mahindra. All the others are normally world projects, where decisions are made at the global level. Our global team takes care of getting those projects. Therefore, we do not see a potential for line fitments.
The POE segment, on the other hand, has a lot of potential in India. Car OEMs come out with these limited edition upgrades to spruce up sales and we are already the number one choice of these OEMs to develop upgraded radio units equipped with latest technologies. We see it as the biggest segment for Blaupunkt in India and currently, nobody is focusing on this segment as such.
Then we also want to become a genuine accessory provider for maximum car brands in India. Currently, we supply to 7-8 brands and want to grow this business. As customers get more tech savvy, more are now opting for genuine accessories as it takes care of the warranty concerns and other such factors.
Of course, the pure aftermarket is also not dying, I have been in this industry since 1998, and every year people talk about how aftermarket segment will decline, but that has still not happened. The reason for that is new car sales are on the upswing and India still has entry level cars with no factory fit radio units on offer. Additionally, the second-hand car market is now becoming more organised and a lot of old cars are fitted with new radio units. Because of this, the demand for old single-DIN systems is still there and every player still sells a huge chunk of single-DIN systems in India. We see this trend likely to continue for some more time to come.
Where do you see Blaupunkt ranking in the Indian market in the next three to four years?
We are not looking to become a massive volume player or at being the market leader. We would be happy with securing the third spot in the Indian market. Our main focus is to be profitable. We cannot afford to cross-subsidise like some of our competition as we are only into car infotainment, while they have larger consumer electronic businesses as well.
Will you be profitable this fiscal and what has been the trend in the past?
Yes, we surely will be profitable this fiscal. In the past, we have been cash profitable largely, but we made some losses due to the sharp currency fluctuations a couple of years ago. Going forward, we estimate that we will grow by at least 20 percent in the next three years and the partnership with Rockford Fosgate will play an important part in that.
How did the partnership with Rockford Fosgate come about?
We already had an association with Rockford Fosgate overseas. They were scouting for a distributor in India. In the US, Blaupunkt products were sold by Rockford. So it works the other way round there.
Blaupunkt’s engineering capabilities are focused on car radio units, while Rockford has a large range of mid and premium car audio products. Even our audio products are largely entry-level products, so there is a distinction between the two brands. When we were deciding, we had the choice of going with our Velocity brand and developing an entirely new range of premium products, but we decided to go with Rockford which already had a good lineup of high-end products.
How has the initial response to the Rockford range of products been?
It has kicked off really well. At Blaupunkt, we have been used to selling speakers of up to Rs 10,000. Expensive systems from Rockford are seeing sales and not only in big cities like Mumbai or Delhi. We recently sold some of these speakers in a smaller city like Raipur. In fact, the demand is more from smaller towns. We are now developing a demo car fitted with Rockford system and it will be ready by the festive season.
What are the latest trends in the car audio and infotainment industry?
What everyone is now working on is integrating the mobile interface on the car radio units. Another big area is navigation. We already have plenty of products keeping in mind these two trends and we keep innovating.
We are also focusing on software development, which is happening in India now, at least the android development. It helps the India operation because then we can give our feedback based on the market requirements. This is the first time in the history of Blaupunkt that software development is happening here. You will see a lot more mobile phone integration, and more products with these features would be launched in the future.
How is the company integrating technologies like Android Auto and Apple CarPlay in its systems?
We have a fully android compatible radio which we launched 5-6 months ago called the Capetown, it is a premium priced product but now with rising demand for the technology, we expect the prices to go down in the next three to four months.
In the end, it is all about adaption, as soon as the adaption increases prices go down. Just like the USB and Bluetooth systems are the norms now, we expect that android based systems will become the norm in the next one and a half year.
With Apple due to its stringent control mechanism, it is right now difficult to introduce them in India. While we have CarPlay products overseas, we have not launched them in India just because it is too expensive.
How is autonomous driving going to change the car infotainment industry?
For India, I personally believe that autonomous driving is still pretty far away. However, whenever it is incorporated, it would actually prove to be beneficial for the industry as occupants will have a lot more time on their hands to use the infotainment system. They would want more functionalities and more features on their systems. Right now, there are a lot of restrictions. For example, you cannot have the video functionality unless the handbrake is up. With autonomous driving, such limitations will go and customers would want their radio units to have many more features than they currently have, including forms of entertainment such as video games.
What have been the important learnings from working with a German parent like Blaupunkt?
I think besides the normal things like the technology advantage, which is extremely important, what we have learnt is the processes that Blaupunkt has. Be it finance, quality manufacturing or any other aspect, it is truly amazing. It provides a solid structure to the company.
In the beginning, it takes time to understand and adapt to these processes, but once you get used to them then you cannot go back. After using them, you see the difference and realise how important it is to have no shortcuts and have a well-structured system which does not compromise on quality. We have truly learned a lot and continue to do so still.
INTERVIEW: William R Jackson, president and CEO of Rockford Corporation