O C T O B E R 2 0 1 8

INSI

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T Product Leadership. Like No Other.

The Electric Shift-on-the-Fly Transfer Case Program

The NexTrac InteractiveTorque Coupler Program

The Toyota SynchronizerClutch-Body Rings Program

The e-Mobility Electric Vehicle Transmission Program

Cutting-Edge New Manufacturing Infrastructure

The Dual-Clutch Transmission Program

The Dual-Offset Transfer Case Program

Product Leadership.Like No Other.

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SPECIAL

12-PAGE EDITION

ISSUE

50

Innovation TIMES 2

At Divgi-TTS, we are passionate about our vision to create a world-class product leadership brand. In keeping with this vision, our investment plan is shaped by the following layered concepts:

1. Technology-led innovation for product development

2. Product and application diversity3. Customer and geographic diversity4. Manufacturing excellence for quality and

productivity5. Financial discipline6. Collaborative models with stakeholders

The key operating strategic theme is intellectual property that is the pivot around which our business strategy revolves. The other facets of our business strategy are force multipliers that bring effectiveness and efficiency to the execution of the core strategy.

Technology development is underway to support five product revenue streams from products and components for:

1. 4WD products that will include transfer cases, automatic locking hubs and our NexTrac brand of torque couplers

2. Manual transmission and synchronizer systems

3. Dual clutch automatic transmissions4. eGearDrive transmissions for electric

vehicles5. Components from the above products for

export into global markets

The company has technology development underway for dual clutch transmissions to

supplement its technology licence agreement with BorgWarner Inc. for 4WD products. In addition, several smaller projects are underway with globally renowned technology consulting companies to stay abreast of incremental technology advances underway in automotive drivetrain systems.

Investments are concurrently underway to modernize our three manufacturing plants to achieve state-of-the-art quality and productivity standards. The significant increase in net block over the last three years reflects this investment that is expected to take sales turnover to 50 crores a month by end of calendar 2019. Net block pertaining to manufacturing assets has grown from around 7 crores in FY15 to almost 34 crores in FY18. These pertain to manufacturing modernization at all three plants and more so at Sirsi and Shivare for Toyota, Ford U375, and other overseas OEMs. In the next two years, investments worth over 100 crores will drive our capability and capacity to achieve 1000 crores by 2021.

In addition to India, our market focus will remain on China, Korea, Russia and Central Asia, Europe and UK, North America, and Brazil in South America. The company is investigating multiple options to create market presence globally in these markets. Our market assessment indicates that up to 75% of our long term revenue could come from outside India.

To achieve application diversity beyond passenger cars and light utility vehicles, we are also exploring opportunities in commercial truck and farm equipment segments. India is the world’s largest ag tractor industry and the world’s two largest OEM’s by volume are, respectively, Mahindra & Mahindra and TAFE from India. Opportunities exist in synchronizer systems as synchronized transmissions begin to penetrate designs that used to be mostly non-synchronized. Our woven carbon friction material has the best in class energy density capacity for commercial truck and ag tractor applications.

The company has two manual transmission models under development: a 5-speed model for 1.6 to 2.0 liter petrol engines that are commonly in use in Russia and Central Asia and a 6-speed design

PRODUCT LEADERSHIP. LIKE NO OTHER.

Editorial

Innovation TIMES 3

for high performance diesel engines up to 420 Nm torque capacity. Commercial production and sale is expected to start from 2020. Development work has also commenced on a 7-speed DCT for premium hatchback and compact utility vehicles that will be powered by the new generation Euro VI petrol engines slated to hit the market from 2020 onwards. The company’s business model is flexible and will include both CBU, and CKD kits.

The company already has a design for 200 Nm continuous torque reduction unit for electric vehicles. The highlight of the design is its light weight, and superior design and manufacturing to exacting precision and accuracy standards. The Park Lock is electronically monitored and actuated, providing an error-proof safety feature for electric cars. It will be the first of its kind in India, indigenously developed and manufactured in India to standards that rival the finest in the world.

The component business is drawn from components that go into the four product categories described above and via export programs represents a significant opportunity space. It provides a fast access to profitable markets that can support the investments in modern and state-of-the-art equipment from global sources that are the best of the best. The scale so built can then be harnessed in the manufacture of state-of-the-art-technology products for global markets.

This product portfolio and the geographic diversity of the markets they bring are the pathway to realizing our vision of building a product leadership brand out of India over the planning horizon of the next five years – a brand that is recognized for continuous innovation, superior solutions, distinctive products and world class development and manufacturing. Simply put, Product Leadership. Like No Other.

Jitendra Divgi Managing Director

Manufacturing ExcellenceOver 50 years of manufacturing

precision automotive componentsand systems

Financial DisciplineHawk-eye view to

fiscal performance

CollaborationBest-of-Breed

Networking

Product &Application Diversity

••

RWD/ FWD Transmission

Customer &Geographic Diversity

• Varied Industry SegmentsVaried Regions •

Technology-LedInnovation

Pioneering Research

Innovation TIMES 4

In our July 2016 edition of Innovation TIMES, we had detailed how we successfully satisfied each requirement of Toyota India to qualify as a supplier of “Piece Gears” (Clutch-Body Rings) locally. We have since entered its supply chain and commenced serial production.

Market Agility: The quality delivered on the supplyof flange and sprocket-driven components for theToyota Tundra pickup truck world-wide since 2012 was instrumental in getting us into Toyota India’s supply chain when it begun its India localization.

Talent: The highly competent Toyota Nagoya Engineering team also accepted our suggestion for an alternate process for superior performance.

Speed: A complete production line has been set up and serial supplies of all gears has since commenced. Divgi-TTS has stepped up the first rung of the supplier ladder and is on the road to becoming one of Toyota’s strongest suppliers.

Learning for Growth: The four gruelling audits helped us learn more on top-quality manufacture.We now apply the same to other projects.

Manufacturing Excellence

THE TOYOTA SYNCHRONIZER CLUTCH-BODY RINGS PROGRAM

Toyota Production Line

Team Toyota Clutch-Body Rings Program

Innovation TIMES 5

It was almost a decade and a half ago, in 2004, that Divgi sensed the direction in which the automotive transmission technology would be headed in India and pitched the Dual-Clutch Automatic Transmission to Tata Motors.

Market Agility: Divgi-TTS’ vision was vindicated a full decade later, when, in AutoExpo 2014, Maruti unveiled the Celerio, India’s first vehicle with an automatic transmission (AMT) built in India.

Learning for Growth: The Engineering Team saw several similarities in the designs of the outwardly two different technologies—the Transfer Case

and the DCT and figured out a way to deploy the transfer case submodule technologies laterally into the DCT.

Innovation: Working through the years, the team brought the designing to a stage where considering the manufacture of such complicated technology product such as the DCT became technically and commercially viable.

Speed: Sure enough, when the markets matured to absorb this technology, the team was ready to tie-up with top-notch consulting firms from Germany, to help it realize its dream.

Collaboration

THE DUAL-CLUTCH TRANSMISSION PROGRAM

Team DCT Program

Innovation TIMES 6

During a conference attended by Jiten Divgi at Sweden early 2014, he sensed an opportunity to introduce Divgi-TTS’ Electric Shift-on-the-Fly (ESOF) Transfer Case on the vehicles of one of Russia’s largest SUV manufacturers. It was on the lookout for an alternate vendor for 4x4 capability on its fleet.

Market Agility: Divgi-TTS realized this as their “door-opener” into the global world and followed through in right earnest.

Innovation: It was not a cake-walk. The Team really needed to adapt the transfer case to a transmission that was completely new to it.

Learning for Growth: The volumes from this deal were ten-fold and technically, it was to be the first time that the Divgi-TTS transfer case was to be tested under the rigorous environmental conditions in the deserts of Astrakhan. Divgi-TTS sailed through it all. Fitting the business to suit Russian culture was another immense learning.

“We tested the two vehicles fitted with the ESOF over 1 lakh kilometres through some of the most gruelling terrains. We were pushing the vehicle so hard that any other system would’ve definitely broken down. I’m pleased to say that the Divgi-TTS ESOF withstood and survived all of that abuse. It’s truly among the world’s best quality”

Boris SavhalovHead – Engineering Services

Customer/Geographic Diversity

THE ELECTRIC SHIFT-ON-THE-FLY TRANSFER CASE PROGRAM

Innovation TIMES 7

Product/Application Diversity

THE E-MOBILITY ELECTRIC VEHICLE TRANSMISSION PROGRAM

The eGearDrive has been part of the Divgi-TTS’ stable of products since 2009. The hype of electric vehicles began in 2014.

Market Agility & Learning for Growth: Since 2009, Divgi-TTS was aware that the electric vehicle market would make headlines sooner or later and, even without any demand then, worked on understanding its technology and manufacturing complexities. All of that work came handy when, in 2014, Mahindra Reva Electric Vehicles (now Mahindra Electric Mobility) placed an order for a prototype to be fitted onto the Mahindra Reva, its electric vehicle. Mahindra purchased two more prototype units by 2017.

Innovation: A design for 200 Nm continuous torque reduction unit and with 8.28:1 gear ratio is already available. At 27 kgs. weight, the drive can be considered amongst the lightest in the industry. The electronically monitored and actuated Park Lock System provides strong error-proof safety. The superior design and manufacturing that is subjected to exacting precision and accuracy standards make the eGearDrive the first of its kind in India, indigenously developed and manufactured in India to standards that are amongst the world’s best.

Speed: Divgi-TTS is also all set to supply protos of its hybrid transmissions to overseas customers for hybrid vehicles with a maximum torque capacity of 300 Nm.

The e-Mobility Electric Vehicle Transmission

Hybrid Transmission - 3DeGearDrive

Innovation TIMES 8

Divgi-TTS well understood that while Dual-Offset Transfer Cases are available with vendors globally, most of them are gear-driven and extremely heavy, an attribute that renders the vehicle fuel-inefficient.

Market Agility: It was then that the Team recognized that reduced weight is the key to generating an interest in the OEM on this product.

Learning for Growth: All of the learnings from the designing and manufacturing of the single offset-

transfer cases over the last two decades were applied into this development to produce a chain-driven transfer case.

Innovation: This transfer case weighs under 70 kg, and is significantly lighter than its nearest competition, globally. Divgi-TTS also has a variant with an embedded differential.

Speed: Prototypes of the two variants have also been made and supplied to renowned OEMs for their field tests.

Product/Application Diversity

THE DUAL-OFFSET TRANSFER CASE

Dual-Offset Transfer Case with differentialDual-Offset Transfer Case without differential

Team Dual Offset Transfer Case Program

Innovation TIMES 9

Mahindra introduced the Nextrac FWD/AWD Interactive Torque Coupler on the its XUV500 in September 2011 and entrusted the task of supporting the product to Divgi-TTS.

Market Agility: Divgi-TTS swiftly recognized that a localizing program of the product will provide not just Mahindra but also other OEMs in India considering the introduction of a product for their FWD vehicles with immense agility over cumbersome importing formalities and servicing issues through availability of information, material and quality service, application and other functional support.

Technology: This recognition drove Divgi-TTS to proactively set up its NexTrac Electronics Test Lab1 in 2011 at its Bhosari facility for the testing of signal integrity of its Electronic Control Unit (ECU). A functional test rig is also set up to conduct design development as well as application specific end-of-line testing.

1. Information about this cell was published in our Innovation TIMES Issue 36, Q4 2014

The repair cell set up in 2011 has since been upgraded to a full-fledged assembly line. In fact this has facilitated the manufacture of a 650 Nm torque coupler prototype for Mahindra.

Innovation: Mahindra found its solution in Divgi-TTS’ innovative approach of handling its low volume assembly and testing requirements of its NexTrac Interactive Torque Coupler on the XUV500 without compromising any of the process quality parameters.

Learning for Growth: All of Divgi-TTS’ frugality yet effective methods of localizing the assembly and support to the NexTrac has been acquired from all learnings from our several such innovations done in the past.

Financial Discipline

THE NEXTRAC INTERACTIVE TORQUE COUPLER PROGRAM

4X44X4W E T R A N S F E R P O W E R T O T H E 4 X 4ANCHOR OF STABILITY ANYWHERE, ANYTIME...

NexTrac® Interactive Torque Coupler from Divgi TorqTransfer Systems for “blink-of-an-eye” and “on-the-fly” 4-wheel traction.

NexTrac Cell

Innovation TIMES 10

CUTTING-EDGE NEW MANUFACTURING INFRASTRUCTURE

Gear Grinder

Gear Shaper

World-class Development & Manufacturing

Gear Tester (Klingenberg)

Innovation TIMES 11

CUTTING-EDGE NEW MANUFACTURING INFRASTRUCTURE

Gear Tooth Roofing

Spline Rolling

World-class Development & Manufacturing World-class Development & Manufacturing

PRODUCT LEADERSHIP.LIKE NO OTHER.

All matter in this newsletter is copyright & is for meant for private circulation only.For additional information visit www.divgi-tts.com