Indian Innovation

Small But Smart

Sedemac empowers the brain of small engines with strong algorithms to perform better   

The signal timer is off to its last 10 seconds, the light is set to turn green from red and you can finally zip away. The engine on the overpowering BEST bus comes to life on your right, the SUV behind you also lets out a roar and all the throttles to your left are pumping harder than ever. The light turns green and they’re off, except for you, the vehicles behind are coming too close for comfort, the ones you’re blocking are incessantly honking away. All this, while you’re stuck with a cranking engine that just won’t budge.

Be it a rickety autorickshaw or a humble two-wheeler, we’ve all witnessed this scene at a traffic signal. There’s one Indian company that is busy perfecting what it calls an integrator starter generator (ISG) that would eliminate such cold start-up issues for two and three-wheelers. Pune-based Sedemac Mechatronics that specialises in developing power train controls for engines has deployed a few of these units at leading Indian OEMs on a trial basis.

 Set up in July 2007, this automotive company was founded in an IIT-Bombay lab by a visionary professor and three motivated mechanical engineering students who wanted to build a company with a distinct technology position. Shashikant Suryanarayanan, associate professor at IIT-Bombay’s mechanical engineering department and the chairman at Sedemac simplifies their product focus for the benefit of a layman, “Power train refers to the parts between the point of production of power and its consumption. Thus, in a vehicle, a power train is anything that goes from an engine to its wheels and we build controls for such power trains.” The company derives its name from the initial syllables from each word of the operating principles of mechatronics – separating decision-making from actuation. 

Having secured a PhD from University of California, Berkeley and worked in the United States for six years including a stint at General Electric, Suryanarayanan, was beckoned to his homeland by the sheer feeling of what he calls “idealism” and the intention to build a strong controls labs at one of the IITs. And that is exactly what attracted his three potential co-founders – Amit Dixit, Manish Sharma and Pushkaraj Panse who found their way to his class in 2003 and 2004. 

“I was told by my classmates that there is a new professor who is initiating these industry projects as part of the academic course, that’s how I decided to go meet him,” recalls Sharma, who heads the supply chain at Sedemac. While their motivation to meet Suryanarayanan was the same, each one of them was convinced that they didn’t want to end up with what Dixit defines as a “regular job” and even share how two of them had already discussed their desire to build something of their own in the automotive space. Within a year’s time of registering the company, they had secured Rs.25 lakh worth of business from a leading two-wheeler OEM and also secured funding from Nexus Venture Partners.  They subsequently received another round of funding from India Innovation Fund in 2011. 

In March this year, Sedemac attracted another Rs.50 crore from Nandan Nilekani along with existing investors. On the whole, the auto parts maker has raised around $10 million till date. “We did sufficient ground work to validate their innovation. We spoke to auto industry heads and there was a lot of support from within the industry. Normally, large companies don’t encourage start-ups but their product had scope for  great impact on vehicle performance and fuel efficiency,” says Rajesh Rai, advisor, India Innovation Fund, who was its CEO in 2011 when it invested in Sedemac.  

Building smart engines
Convincing top OEMs to consider an automotive part of a company with no referral client was not an easy job. There were two key challenges – highlighting the benefits for the OEM and the end user and convincing clients to depart from existing suppliers and instead go for its products. The company counts TVS Motor Company, Bajaj Auto and Mahindra Two Wheelers among its first clients in this space. 

Suryanarayanan explains, “OEMs don’t frequently opt for a different power train control system. This comes up for discussion only when there is opportunity for substantial change in terms of emissions and safety. And, thus it was crucial to build a product that either improves an existing technology or brings something new to the market that would reduce their costs and increase benefits for their customers.” He recalls how the product passed through multiple departments where they were tested on several parameters – checked for originality, if the proposed technology actually works, ability to provide support, etc.

And having a product that simply replicates what another company already does won’t make the cut in the automotive industry. “OEMs in India are a smart community as a whole, thus presenting a ‘me-too’ product won’t help. What you need is a clearly differentiated product to enter this competitive industry,” adds Panse, the COO at Sedemac.  

Sedemac currently builds power train controls for engines used in two-wheeler vehicles and generator sets. Its 2-wheeler product, Smart Ignition is a pioneer in engine control systems that ensure better performance derived from single-cylinder engines involving a system and an algorithm that uses information from only one sensor.

While most suppliers are constantly working on reducing the number of components and integrating software, Sedemac claims that they are the only ones to have done so while also delivering enhanced performance.  Dixit, the CTO at Sedemac, cracks the code behind the product, “Every engine has an explosion happening inside, the time at which that occurs has a great impact on fuel efficiency and the emissions you end up with. The smart ignition gives you better performance with just one sensor thus reducing costs for OEMs and providing a better experience for the rider.”  

India ranks as the global leader when it comes to number of two-wheeler vehicles manufactured, after China and Indonesia. In FY15, the country’s OEMs rolled out 16 million two-wheelers. This segment is dominated by Hero Motocorp, Honda, TVS Motor, Bajaj Auto, Yamaha India, etc. Sedemac counts the top 2-wheeler OEMs as its clients. Since introduction in 2012, its Smart Ignition solution has now been implemented on over five million 2 & 3 wheelers. “The Indian two-wheeler market is only set to grow from here. Sedemac’s product has a strong element of software in its engine control solutions with low-cost hardware and they have a price-competitive product. The market potential is huge,” says Sandeep Singhal, co-founder, Nexus Venture Partners. 

Sedemac’s second product is power train controllers for generator sets with variable speed controls and electronic governors. India is touted to be the third largest producer of electricity globally in terms of production and consumption, yet 27% of the generated energy is lost during transmission or is stolen, reports a 2016 document on the Indian genset market by Technavio. The low supply is met by the use of gensets fuelled either by diesel or gas. A fuel efficient genset would help a great deal to ease the burden of a burgeoning fuel import bill. Sedemac’s genset controller does just that among many other things. “Our genset controllers automate several functions of the generator to improve efficiency. For instance, when the main power supply is cut, controller will automatically start the generator. This ensures uninterrupted power supply for the end-user. Also, if the fuel level reduces or the generator vibrates abnormally or gets heated too soon, there is a facility to send an automated message to the user’s mobile phone,” describes Panse. 

Cummins, Kirloskar, Mahindra, Caterpillar and Ashok Leyland are among the big OEMs in India that manufacture gen sets. Sedemac counts four of these companies among its clients in addition to other small players. In FY16 alone, the company touched over 30,000 generator sets with its genset control products. 

An official from Ashok Leyland, which manufactures diesel gensets called Leypower, says, “Several companies had pitched their control systems to us, but Sedemac has a very innovative approach with clear benefits to the end-customer. What I like about them is any product or feature pitch they make is always keeping in mind the end-customer.” Another genset customer impressed by the cleantech firm’s product is Kirloskar Oil Engines, which sources 80% of their generators from Sedemac. “Earlier we would import these genset controllers, now with Sedemac’s low-cost units, it results in a 20-25% savings at the product level. More than reduction in our costs, the company has the ability to innovate, develop according to customer’s requirements and provide service support across the country,” says an official. He adds how securing such technology via the reverse engineering route often restricts future innovation but Sedemac is always open to developing features as per customer’s needs.

A 6Wresearch report that was out in April 2016 states that the Indian diesel genset market is set to grow at a CAGR of 6.64% during 2016-2022. This certainly bodes well for Sedemac given that its clients have a lion’s share of the market.   

Need for speed
They might have succeeded in entering the automotive parts space by signing up big OEMs but that isn’t enough. The company is now focusing its energies on fueling growth across the border. Sedemac has just sent out its first shipment of gensets to the African continent and is actively looking at pursuing more populous regions that tend to be disconnected from reliable power grids. “With no reliable power grid around, Africa ends up purchasing a lot of diesel gensets and not just as a source of back-up power but often as a primary source of power,” explains Panse. With a business development manager posted in Tanzania, the company is focusing on countries such as Nigeria, South Africa, Tanzania, Kenya and Ghana. The company will sell its wares directly to OEMs in these countries and also approach distributors to have a wider reach. 

As for the smart ignition business, they might target some OEMs based out of China – a market that includes big names such as Loncin, Lifan, Haojue, Luoyang North Enterprises and then ultimately the US and Europe. They have begun establishing relations with OEMs in China, and Japan and US are on the radar for power train controls for engines used in devices like a lawn mower. Suryanarayanan says, “The total addressable market for us with our existing products is $1.5 billion - $2 billion. The key thing is having a big market to address.” 

Nexus Venture Partners’ Singhal points out how this focus on making it big is what impressed him about Sedemac, “Right from the beginning they were thinking about becoming a large company.” Sedemac has readied itself to cater to a bigger market. It currently has 175 employees on its rolls with most of them working in the R&D and engineering department.  The company has a tech centre and a separate manufacturing facility spread across two acres in Pune. 

Equipped with a tech centre and a state-of-the-art surface mount technology (SMT) lab comprising highly automated robotic machines, Sedemac hopes to launch another product in a year or two.  “Since we have a running product in ignition, it makes sense to look at 4-wheelers next. These customers are more sensitive to quality and delivery track record. The fundamental focus of the product will always be fuel efficiency, better emissions and safety,” sums up Sharma. 

India Innovation Fund’s Rai says that while Sedemac is currently a solid business, they now need to become a great business. He says, “It is important to focus on scale and one needs to ramp up all departments to be able to handle that. Constant innovation and developing next-level products in adjacent areas must be a key focus area.” Singhal recalls Sedemac’s pitch to him whereby Suryanarayanan and Panse had talked about building the Bosch of India.  So, are they there yet? “They might not be a Bosch in terms of size yet, but given the quality, standard of their products and the value they create for their customers, the OEMs already have begun perceiving them as that,” smiles Singhal.