November 24, 2020

Covid disruption triggered localisation vs globalisation debate: Seetarama Kotagiri, Magna Worldwide



MUMBAI: Canada’s Magna Worldwide, the world’s third largest auto-parts provider, final week introduced the appointment of Seetarama Kotagiri as its chief government officer.

By means of the previous couple of a long time on the Ontario-based firm, the Andhra Pradesh born engineer climbed the ladder, harnessing his R&D experience. From being a product engineer, he moved on to guide the R&D perform, after which grew to become the chief know-how officer. He’ll take over as the corporate’s world CEO beginning January 2021.

In his first interview to the Indian media, Kotagiri tells ET’s Nehal Chaliawala and Ketan Thakkar that the restoration from Covid has been higher than anticipated, and that robust reserves helped Magna tide over the disaster.

As enterprise resumes, the corporate is open to acquisitions, together with in India, and the nation might tackle extra enterprise duty as firms look past China, he mentioned.

“And I clearly have a bias (towards India) due to my heritage,” he instructed ET. Edited excerpts:

How robust was it within the first six months of this calendar yr? And are you seeing indicators of revival?
The primary six months and March to June, particularly, had been undoubtedly among the many worst instances. It was nearly how nicely we might handle. We went by way of the optimization course of, similar to the remainder of the business did. It is at all times a tough resolution – the workforce put its coronary heart and soul into the corporate. However we needed to undergo it to come back again robust and wholesome for the bigger good of the corporate. We have not but come again to the pre-COVID-19 degree of 2019; I believe we might have to attend until 2022 to get again to 2019 ranges.

The ramp-up has been considerably optimistic. We’ve got a wholesome stability sheet, which I attribute to the self-discipline that we have had in going by way of capital allocation and funding technique. We had been prudent, however we did not have to drag again on what we believed was vital for the long run – whether or not it was R&D or improvement initiatives and so forth. I believe it is a cycle, so we’ve to try this. After all, we prioritised issues trying on the general tendencies and determining what is sensible.

What are the components aiding demand restoration?
It is going to be tough to foretell the market. However as we went by way of the stock ranges, even within the US and Europe after the shutdown after we got here again on, we undoubtedly noticed what we consider is filling of the pipeline. The way it (the pandemic) adjustments the buyer notion of wanting personalised transportation versus utilizing public transportation – that could possibly be slightly little bit of an affect. Whether or not it is sustainable, and for the way lengthy, I believe stays to be seen.

India stays a small a part of your whole enterprise? What position do you see India enjoying? Would you be open to inorganic alternatives?
We got here in 2008 and a few of the teams had been there even earlier than. We make mechatronics, mirrors, Cosma seating, and we’ve a improvement centre right here. I take a look at the put in capability base and the capital base that we’ve, we must always have the ability to deal with all of the wants inside the Indian market. We take a look at it from a business-case perspective each time. The volumes that we had thought of haven’t totally materialised and we proceed to watch it. If the alternatives are there, which can be sustainable over the long run we are going to see what we will do in India.

We at all times undergo a standard enterprise course of taking a look at all avenues, whether or not it’s natural or inorganic investments, both to deal with a spot within the geographic footprint or a product portfolio or to deal with a buyer want. We try this in all areas of the world. And India for certain just isn’t an exception to that.

India is eager on international firms to come back and make in India for the world. With world OEMs trying on the China-plus-one technique, can India achieve?
It is by no means off the desk. The commerce insurance policies and commerce discussions depend on the regimes and the insurance policies throughout that point.

The OEMs, and the OEM ecosystem, are undoubtedly taking a look at the opportunity of the scenario that all of us needed to face in the course of the COVID-19 disaster and are nonetheless persevering with to take care of. How can we ensure that there is no such thing as a disruption within the provide base? So there may be dialogue of localization versus globalisation.

We’ve got to have a look at it from the attitude of the capital base that you’ve and the efficiencies that you’ll want to proceed for the long term. We’ve got a presence in Thailand and in India. We hope India does flip into a much bigger market and the business is altering, with ICE (inside combustion engine) going to EVs (electrical autos) and the enterprise mannequin is altering from personalization to probably mobility as a service. For us to have the ability to scale based mostly on our product technique, we’ve the modularity and the scalability and the manufacturing footprint. So our means to develop to fulfill the demand, I do not suppose goes to be a constraint by any means.

So how do you intend to develop additional in India?
It isn’t as a lot top-line growth-based planning, as it’s about understanding the place the business stands and what worth proposition we will convey to the desk. These components decide how a lot and what areas we put money into.

The regulatory adjustments on emissions, the infrastructure change – all of that is going to play a job. China took a leap of change within the final 15-20 years. We consider the construction and all the things else in India is able to doing that. And if that occurs, we’re ready and able to go.

India is a large R&D base for gamers like Bosch. Might India play such a job for Magna?
India has an exceptional base by way of expertise, means and language. It has a democratic system. All of this places it in a really favorable place. And I clearly have a bias due to my heritage.

We have already got a big presence with a improvement middle in Pune and in Bangalore with varied teams. And we proceed to have a look at increasing sure features of engineering.