The auto ancillary market deals with the production and sale of intermediate equipment and automotive parts that are used in automobile manufacturing.
The Indian auto-component industry clocked the highest-ever turnover of ₹5.6 lakh crore ($69.7 billion), and grew 32.8% in fiscal 2022-23. In addition, industry is predicted to be worth INR 9.35 lakh crore ($150B) by FY 2028, increasing at a compound annual growth rate (CAGR) of 14.74% between FY 2024 and FY 2028.
The auto ancillary market is a critical and integral segment of the Indian automotive industry, and is expected to drive India’s ambitious 6.5% growth targets in the coming decades. This market is highly fragmented - with Bharat Forge, Mahindra CIE Automotive, Bosch, & Sundram Fasteners emerging as the leaders in their respective sub-verticals.
Catalysts and Bottlenecks to growth
Europe and the U.S. are the key export destinations for the auto-components industry. With both markets actively decoupling from Chinese manufacturers - adopting what’s best known as the China Plus One strategy, it creates an amazing opportunity for Indian manufacturers to gain market share.
This opportunity, however, comes with its own strings attached.
European OEM buyers have traditionally been focused on working with suppliers that adhere to some of the most stringent sustainability requirements in the world. In 2021, the EU commission announced the adoption of the Corporate Sustainability Reporting Directive (CSRD) in line with the commitment made under the European Green Deal. The CSRD will substantially increase reporting requirements on the companies falling within its scope in its efforts to expand the sustainability information for users.
The directive will also entail a dramatic increase in the number of companies subject to the EU sustainability reporting requirements. The NFRD that is currently in place for reporting on sustainability information, covers approximately 11,700 companies and groups across the EU. The CSRD is expected to increase the number of firms subject to EU sustainability reporting requirements to approximately 49,000.
Meanwhile, in the USA - California recently passed the SB 253 and SB 261 regulations - which require all companies with significant operations in California to disclose carbon emissions across their entire value chains.
In addition to pressure from clients, leading Indian manufacturers (Top 1000 by market cap) are also expected to meet the Business Responsibility and Sustainability Reporting (BRSR) disclosure requirements as mandated by SEBI, starting FY 2023.
Sustainability Disclosure Challenges
When working on a sustainability disclosure strategy, companies are faced with a few key challenges:
Alphabet soup of compliance requirements Very often, it’s hard to determine which frameworks are most applicable to your organization. Between BRSR, GRI, CSRD, GRI, CDP, SB 253 and dozens of customer-specific Supplier Assessments - it’s very easy to get lost. Many of these frameworks have overlapping disclosure requirements, and maintaining an organized process via a software solution can help save you hundreds of hours in re-building new reports every month. More often than not, companies have multiple frameworks being applicable to them.
Silo-ed Data sources Quality sustainability reporting requires bringing together data from your HR, Operations, Finance, and Sustainability teams - and enriching internal data with external emission factors, competitor benchmarks and other local context. Often, operational data itself isn’t easily accessible or interpretable by someone at the head office. Multiple plant managers need to sign off on its correctness, with records maintained at different sources (or different units).
All of these data sources need to be brought together under one roof - aligned to the reporting frameworks & disclosure requests relevant to your business.
Lack of clear data ownership and reporting processes Most organisations set up an ad hoc reporting process when they first face data requests from their regulators, customers or investors. Very often, this responsibility ends up rolling into the legal or operations teams - who find they don’t have as much visibility across the rest of the organisation as they need. Often, they also lack the technical sustainability knowledge to be confident in the correctness of data they’re disclosing. At this stage, bringing an external sustainability subject matter expert / assurance provider can be very useful. However, adding another stakeholder further increases the complexity of project management, slowing things down further.
Data is only a means to an end After the first couple of years of sustainability disclosure, many companies become cognizant of the pressure to improve their metrics. When benchmarked against foreign suppliers, you don’t want to be left behind - losing revenue from some of your top customers simply because you don’t qualify as a sustainable supply chain partner.
Improving your sustainability metrics requires strategic thinking. Data is only an intermediate stepping point to this. However, we see many companies spend their sustainability budgets stuck in the quagmire of requesting, transferring, converting and compiling excel files and reporting standards.
Working with Oren
Having worked with dozens of leading manufacturing companies across India, Oren has set up a ready-to-use playbook you can deploy in 1-2 weeks without any prior expertise in ESG.
Oren’s Sustainability Hub is the only platform built specifically for the automotive industry.
Data Capture and Consolidation We work with your organisation to set up a digital twin model that replicates the complexity of your organisation. All your offices, plants, warehouses, fleets (and more) can be replicated on Sustainability Hub.
Build a data foundation With Oren’s Sustainability Hub, you can automate capture and consolidation of 500+ data types across siloed data sources - into a single, auditable system of record for your organisation. We help you identify the data sources inside your organisation that need to feed into your ESG reporting, and the departments, people, and processes that need to be set in place to enable the smooth flow of information. As an example, you can very rapidly calculate GHG emissions for Scopes 1, 2 and 3, directly from operational and billing data already available in your ERP platform.
One-Click reporting With a strong foundation in place, your internal and external ESG reporting with auditable, finance-grade ESG data is now a single click away. All you have to do is choose the reporting framework you wish to align with, and let Oren autofill the required indicators.
Customisable solution With Oren’s Sustainability Hub, you get a platform that is customised for your needs. You can pick the material topics that you think are most relevant to your business. The platform also supports you to create custom assessments based on the selected material topics for your internal teams to create a sustainability report if you don’t wish to comply with any existing standard.
Create multiple reports Using Oren’s Sustainability Hub, you just need to collect sustainability data once and the platform automatically segregates it in accordance with your reporting requirements. For example, if you’re required to create a BRSR and a GRI, you just need to collect the relevant data once and reports get created automatically without you putting in twice the effort.
Actionable Insights Now that you have your reporting requirements in place, it’s time to drive change. Beautiful, intuitive dashboards allow you to communicate your findings to your leadership team, generating buy-in for future action. Oren helps you unlock insights for the fastest and most cost-effective pathway to decarbonization, and helps you identify the highest RoI actions you can take within your organisation and across your value chain to drive your sustainability transformation.
Supply Chain Sustainability We’ve built the Oren Sustainability Hub with the vision of the only platform Automotive companies will ever need. Our Supply Chain Sustainability feature brings all your suppliers in one place and assists you in implementing responsible procurement initiatives for Ecovadis while measuring and improving your supply chain’s sustainability performance. You can custom build your assessments or pick from our set of assessments built in consultation with business leaders from the automotive sector.
If you’re preparing a sustainability report this year or are getting multiple sustainability disclosure requests or are submitting your Ecovadis assessment, we’d love to show you how Oren’s Sustainability Hub can become a part of your journey. In addition to the platform, our sustainability team consists of experts with deep expertise in the automotive industry. You can schedule a meeting with them to learn how you can build your sustainability strategy to use your current processes and sustainability disclosures as a competitive advantage.