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Companies need to provide 90-95 per cent of what Europe, US, Japan, Korea may give and for that, you have to spend this kind of money: Pawan Goenka.
Mahindra & Mahindra's expenditure on research and development (R&D) has grown nearly 26 times, while its revenue rose by more than10 times from 2003-2016. The company is putting a significant amount of energy and money behind R&D, says company's top official.
Pawan Goenka, Managing Director, M&M, who was in Chennai to announce FISITA World Automotive Congress 2018, which he says is the Olympics of automotive technology in the world, said that companies must spend more and more in R&D to remain functional.
"If you don't spend that kind of money in R&D, you will never remain at the front line. Companies need to provide 90-95 per cent of what Europe, US, Japan, Korea may give and for that, you have to spend this kind of money," he said.
In 2002, Mahindra spent about one per cent of its revenue in R&D and this was increased to about 4.5 per cent in 2016.
From 2003 to 2016, R&D investment up by 26 times, while revenue up by 10 times, said Goenka, to whom R&D is close to the heart. Company's revenue in 2015-16 was around Rs 40,884.98 crore.
In fact, he joined Mahindra as general manager, R&D in 1993, after working for General Motors in Detroit for 14 years and was instrumental in growing its R&D capability and also the launch of its flagship Scorpio.
Goenka said, "absolute number may be small compared to some of the big companies, especially MNCs, but 4.5 per cent spend on R&D will keep us pretty much keep in the same league of some of the large companies. ...4.5 per cent spend is a significant amount of money, it's not a small amount to invest in R&D,” adding that globally R&D average spend won't be higher than 4.5 per cent.
The company is also careful when it comes to R&D spend. For example, electric vehicles batteries even though Mahindra is the only company who is doing electric vehicles in India, can we spend in battery research? The battery is something we need to take off from the shelf, what we do with the battery what we will invest in, said Goenka, adding that but not in the battery itself, since the company do not have the scale, which requires the kind of R&D.
"When somebody else spending so much in the R&D why can't we leverage", he adds.
On Indian R&D scenario, he said, "Make in India is incomplete without technology from India, that is what Society of Automotive Engineers India and FISITA, is trying to do by bringing technologies to India through the four-day symposium, which will be held in October 2018 in Chennai."
He said, "India clearly moved and made great progress in the automotive industry. As a producer, as a consumer and as a market size with kind of technologies coming into the vehicles. In short period of 15 years, India has moved from being around 13-14 to 5th or 6th in the World, which is by any standard is a huge progress."
"Yes, undoubtedly lot of R&D is happening here not only Indian companies, also by MNCs who have opened many technology centres in India. But nothing compared to the kind of work which is happening in countries like Korea, Western Europe, US, Japan and now even in China," said Goenka.
"Disruptive, affordable and sustainable are relevant in the current context. The focus of the FISITA Congress will be the same. Around 1,000 engineers from India will showcase what India is doing, while around 500 foreign delegates will showcase what is happening outside India", he added.
