Thanks @manpritaurora for your insights on the open questions and the great videos which helped in understanding the entire exhaust system of a vehicle. Meanwhile, I received a telephonic revert from the Sharda’s IR company with answers to some of my questions (Most of the answers were generic though and did not offer much extra insight)
A few points based on the posts in the thread and the revert from SMIL:
1. Maruti : As mentioned, Maruti has a tie-up with Futaba from Japan which is one of the leading 8-10 global companies in automotive exhaust systems. I got to know from SMIL IR team that recently Tenneco has won a small share of business with Maruti. Regarding SMIL’s prospects with Maruti, they didn’t have much to say. I think scope is limited for SMIL with 2 global players already having entered.
2. SMIL product portfolio : As I could understand from the videos shared by @manpritaurora and also others on YouTube, an exhaust system comprises of multiple components such as exhaust manifest, various sensors (O2, NOx etc.), 3-way catalytic converters including SCR for BSVI norms, sound moderation components such as resonators and mufflers and the exhaust pipes including tailpipe.
The question is, what does SMIL manufacture and supply to Indian OEMs? Does it manufacture the entire exhaust system with all components starting from exhaust manifest to tailpipe or does it only manufacture a sub-section of the components?
From SMIL’s product page these are the exhaust products in its kitty :
When SMIL says BSVI system or BSIV system, does it mean the entire set of components? I am confused because the most commonly asked question on the concall is regarding traded vs value-added revenues where-in the trading revenues come from pass-through sales of catalysts which SMIL is made to procure by OEMs. Now I am confused if this “catalyst” means the ceramic with the metals or does this mean the entire catalytic converter unit?
If its the latter, then SMIL may be missing out on good margins as the Catalytic Converter is the most expensive part of an exhaust system in my view (Due to the presence of rare metals like Pd,Pt,Rh). Even the Eberspaecher JV is doing the same.
If its the former, then it seems like SMIL procures the catalyst and then does its own canning work (assembling the catalyst into a single unit as per the video shared in the above post).
Can somebody clarify what’s the actual picture here? Is it that SMIL is missing some capabilities and hence losing out on catalytic converter margins as compared to the likes of Tenneco and Faurecia?
An example of Tenneco’s technology : CSTU (Cold Start Thermal Unit) which ensures proper exhaust screening even during cold starts or extended idles – CSTU | Tenneco
3. CNG Vehicles – are they part of TAM or not? At present SMIL does not supply to CNG models either in PVs or CVs (confirmed by IR Team), But as CNG grows and diesel shrinks, CNG may become a necessary segment for SMIL. The question is, can SMIL supply its diesel/petrol exhaust systems for CNG vehicles? As far as I could research online, there doesn’t seem to be any separate exhaust system design requirement for CNG vehicles. Also the fact that CNG kits are fitted in the aftermarket in gasoline vehicles without changing the exhaust system suggests that CNG should be part of SMIL’s TAM. @manpritaurora When you say reduction in content, do you mean the reduction that will happen due to moving from a higher content diesel model to a CNG model where content is similar to gasoline?
4. CV Clients : It seems like the 2 clients for the JV are Tata Motors & M&M. M&M has both SMIL and Tenneco in its supplier list, so I am assuming Tenneco supplies to M&M PVs and SMIL to M&M JVs. That leaves Ashok Leyland and Eicher in the CV space, would be interesting to find out who is supplying exhaust systems to them.
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