— Dr. Jörg Matthias Großmann, Regional Representative India, Freudenberg Group,
Viju Parameshwar, President & CEO, Klüber Lubrication India Pvt. Ltd
Freudenberg Group of Germany offers technically challenging product solutions and services to various industries such as infrastructure, automotive, energy and food. The companies belonging to the group employ more than 3,500 people in India. Dr. Jörg Matthias Großmann, who is also Executive Vice President and Chief Financial Officer, Freudenberg Chemical Specialities SE & Co. KGm, and Viju Parameshwar talk at length about the Indian market which ranks among the most important regions for the diversified Freudenberg Group.
Over the years what has changed for Freudenberg in India?
Dr. Jorg Matthias Grossmann: Freudenberg has been doing business with India for more than 90 years and over the years, the focus has changed due to the economic development in India on one hand and the interest of Freudenberg Group to be present in the promising growth markets on the other. Today, the Indian market ranks among the most important regions for the diversified Freudenberg Group. Our Freudenberg companies in India have settled over the last 12 to 15 years; they are more mature and obtained a stable organisational base, established a solid manufacturing landscape and acquired remarkable market coverage. That provides a much stronger base for accelerated growth than in the beginning.
Have the markets recovered much more quickly than expected?
Dr. Grossmann: In 2012, Freudenberg again recorded another all-time high in India. Compared to the previous year, the company grew sales by 17 per cent to Rs.1,114 crore. That is more than a recovery; that is an unbroken success story at least for Freudenberg.
What market position do you plan to achieve by 2015 and in which industries do you expect to compete?
Dr. Grossmann: Freudenberg’s ambition is to be either the market leader or to be a good second or at least to have a very plausible chance of achieving this position, worldwide. And we serve customers in almost all industrial and commercial markets and markets segments. So it is difficult to define our positioning for each of those markets and segments.
Anyhow, our leadership approach is valid in India as well. On top, India is a strategic growth market for the Freudenberg Group. I think it’s fair to say, that we are among the top players in many market segments already today, even here in India, but steady improvement remains our main task. To support our growth objectives we continue to invest in our operational capabilities in India. This is underscored by the opening of the new Regional Corporate Center in Bengaluru which will support the continued development of Freudenberg’s companies in India.
Furthermore, with its latest investments, the group underpins its intention to foster activities in the region. As a group we expect to continue competing in all the segments and markets and to expand our presence in our strategic growth areas.
How do you plan to respond to the competition in your specific industries?
Dr. Grossmann: Freudenberg Group strictly follows a canon of defined business principles and values. They all aim to grant compliance, fairness, responsible behaviour, respect, customer focus, innovative strength, the safeguarding of the technological edge and other core values. We are ready to face any competition, we are ready to respond to rapidly changing market and economic conditions, we are prepared to deal with even ever increasing regulatory standards, but all with the approach of a decent merchant.
This all together means: take your partners for serious. Listen carefully and with an open mind to your customers. Think ahead. Deal with the issues of tomorrow already today. Anticipate technological changes, anticipate global mega trends, and be prepared for changing regulatory requirements. Or, to say it in short, be a frontrunner. Don’t follow the competition, be ahead of it. And I think we can state that we, in fact, are leaders, not followers.
Can you shed light on new investment planned in India?
Viju Parameshwar: Currently, Freudenberg Group invests in different Indian sites. For one thing, EagleBurgmann KE Pvt. Ltd, Chennai, is currently investing in a new manufacturing plant for non-metallic expansion, for another the Freudenberg companies, Chem-Trend and Klüber Lubrication India, are developing their joint operation in Mysore into one of the most modern centres of excellence in the group. These will be ongoing for the next three-five years.
Furthermore, a major R&D facility has been set up for the mechanical seals business in Pune. And last but not least, Freudenberg has recently inaugurated its new Freudenberg Regional Corporate Centre in Bengaluru.
Can you elaborate on the group’s facility in Mysore?
Viju Parameshwar: Freudenberg Group is investing around Rs.130 crore in Mysore, making it the company’s largest investment in Asia-Pacific region and the largest single investment in the chemical specialities area done by the group so far. Freudenberg companies, Chem-Trend and Klüber Lubrication India, are building one of the group’s most modern facilities in Mysore. In the mid-term it will become a technical centre of excellence for customers in Southeast Asia and the Pacific Rim, serving them with customised solutions.
Speciality lubricants, release agents and maintenance products being manufactured in Mysore under the brands of Klüber Lubrication, Chem-Trend and OKS have various applications in different industries such as infrastructure, automotive, energy and food industry. This investment will increase the capabilities for manufacture, testing and product development significantly and will result in a large part of the sales in India to be locally manufactured. Further, we will also develop products locally to better serve the needs of our customers in the country.
Can you also give an update on the new facility in Chennai?
Viju Parameshwar: The new facility in Chennai is to manufacture flexible couplings. The company currently does some manufacture in a small rented plant but this new facility will allow us to increase the quality, variety and volume of the products we make in this business. This in turn will bring greater benefits for our customers and increase our India sales.
How do you plan to go about achieving growth?
Dr. Grossmann: One of Freudenberg’s main targets is to grow profitably and faster than the market. For one thing, the group intends to achieve that through organic growth in established markets by excellence and innovative products and services. For another thing, Freudenberg intends to achieve this with the help of selective acquisitions in future markets.
Viju Parameshwar: For example, during this calendar year Freudenberg has made three major global acquisitions only in the chemical specialities area. These will ultimately also have an effect on India. So our growth will come from both internal and external drivers – our buy and build-strategy.
How do you relate the ‘Buy and Build’ strategy in your global outlook?
Dr. Grossmann: Freudenberg defined five strategic fields as to be the priority areas for future investments: chemical surface treatment, oil and gas, medical technology, industrial filters and vibration control technology for railways, wind farms or construction equipment. Buy and Build is just one component in our strategic planning for these business fields. The others are: rapid organic growth and extension of our offerings through accelerated development of technologies we already have in our portfolio. This includes three main aspects: First: growth based on gaining market shares, second: growth triggered through finding new applications for already established products or technologies, and third: modify existing technologies so the fit to the needs of new markets segments.
Can we expect some incredible innovation in the field of technology and R&D from Freudenberg Group?
Dr. Grossmann: Freudenberg Group is well-known for its permanent innovations. Instead of incredible, I’d prefer to say that there are some unexpected innovations underway; improvements our customers are not even thinking of, new applications providing astonishing benefits and added value to our customers. Besides this we partner with customers in co-development activities which are absolutely customer specific and unique. Most of our innovations are improvements of existing solutions. That is part of our success story: continuous improvements based on a solid technology base.
In 2012, Freudenberg Group expensed globally around Rs.1,499 crore for research and development. Worldwide, 2,244 associates were employed in R&D. India is also lending significant momentum to innovation. Freudenberg operates three research facilities in Mysore, Pune and Mohali, where innovative products for the Indian and Southeast Asian/Pacific Region are developed and tested.
But besides investments it needs encouragement to be creative and to share ideas. The Freudenberg ‘Idea Pool’ is an initiative for new business ideas. Associates are invited to submit ideas and suggestions for new products, advanced processes and groundbreaking technologies. All the ideas are very carefully examined. If an idea is developed through to startup, the responsible Freudenberg associate receives a financial award of up to 2.1 Mio (Rs.21 lakh) or the possibility of being involved in the implementation of the business idea. The first few projects submitted have led to the establishment of new companies.