C K Birla Group company, National Engineering Industries (NEI) which underwent a transformation in its brand identity (for its flagship brand NBC Bearings) in late 2011 is summing up 2012-13 as a successful fiscal. Despite the demand slowdown which has dented the growth momentum of passenger car and two-wheeler sales throughout the year, the company is set to report growth of around 13 percent over its turnover of Rs 1,216 crore in 2012-13.
Sanjeev Taparia, senior vice-president, marketing, NEI, says that “though we are also hit by the slowdown in the domestic market, FY13 has largely been a good year for us as we have gained some market share. Also, it’s thanks to our exports which have contributed in maintaining double-digit growth. We have emerged as the largest exporter of ball bearings from India during this fiscal. We now export to 20 countries across five continents and have added five new markets this year to our export portfolio including Latin America, Turkey and African countries.”
NEI has also doubled its exports to the North American markets to over Rs 100 crore during 2012-13. The company has also secured export orders from a European carmaker for its 100 percent electric car project and will supply bearings used in transmission systems, electric motors and other areas under the NBC brand. Meanwhile, in the domestic market, NEI secured Tier 2 supply orders from Tier 1 axle and transmission suppliers Meritor, Dana, Spicer, Bosch and others during the year. “We are in the advanced stage of closing deals with a German and a Japanese carmaker in India, which will materialise in the coming financial year,” reveals Taparia, without disclosing the company names.
The company now plans to consolidate exports by further adding new markets and aims to notch 20 percent of total turnover in exports by 2015-16. For FY12, exports stood at 14 percent of the total turnover. “However, on the domestic front, the market conditions are likely to remain similar until we get good monsoons to change the current dynamics,” says Taparia.
Sixty percent of all NEI business comes from automotive of which, according to Taparia, two-wheelers and farm equipment comprise 25 percent each while passenger cars and commercial vehicles jointly constitute the remaining 50 percent.
“The bearings made for CVs are higher in terms of value than those made for cars. The market size of automotive bearings currently stands at Rs 4,000 crore and we have a market share of around 25 percent considering products (bearings) made in India,” he adds.
Fourth plant in Gujarat, capacity up to 150m
The company manufactures 100 million bearings (units) annually and has a current production capacity of nearly 110 million bearings. NEI currently has three plants with the mother plant in Jaipur having an installed capacity of 60-65 percent of total production volumes.
Taparia reveals that “the company has acquired a land in Gujarat for the fourth plant and plans to invest Rs 375 crore in two phases. Besides investing in the land, we have ordered equipment and we expect that the plant will be operational by the third quarter of this year (October-November 2013). The upcoming plant will have a production capacity of 40 million bearings per annum, taking the total capacity to 150 million bearings.”
R&D takes centrestage
Gradually increasing its annual R&D spend from an earlier 0.25 percent of the turnover, NEI now invests one percent of its total turnover every year and has doubled the R&D headcount in the last two years. Continuing its focus on R&D, NEI is developing one-way clutch technology used in electric starters in two-wheelers (scooters and motorcycles) and heat treatment processes.
Taparia explains that “ball bearings fail because of wear and tear, improper greasing and asymmetry, entry of dust particles and other reasons. To achieve a higher lifecycle and reliability of these bearings, we are working on several heat treatment processes. We have a team in place which is exclusively working on 4-5 new products and innovations.” According to him, the company’s core expertise lies in developing ball bearings, taper roller bearings and cylindrical roller bearings.
In collaboration with a US-based auto component manufacturer named Conmet, NEI is planning to launch a preset hub assembly for CV manufacturers in India later in 2013.
“It is an assembly of bearings for wheel applications. Conventionally, the OEMs assemble the hub at their end on the axle and the tyre is mounted. After the vehicle completes 40,000km, it requires re-greasing, replacement of bearings and other services. The preset hub assembly comes in a ready-to-use form and offers a trouble-free life of 200,000km,” he clarifies.
While the company plans to begin the production of these CV-specific assemblies by November 2013, it has already secured an order from a Swedish CV maker and approvals from India's largest CV maker.
Meanwhile, working on the concept of fuel efficient bearings for two years, the company has now developed a low torque bearing technology, ideal
for transmissions and wheel bearing applications in two-wheelers.
“While it is proven that this technology can enable up to 15-20 percent of torque reduction which in turn enables increase in fuel efficiency of 2km per litre in two-wheelers, our R&D is now extending similar technology to cars and CVs,” says Taparia. The company has recently supplied this technology under the NBC Bearings brand to a Japanese two-wheeler manufacturer in India.
Eyes advanced tech alliances via M&As
Eyeing an opportunity to leapfrog into the future, NEI is looking for possible mergers and acquisitions (M&As) and has shortlisted a couple of European companies.
Taparia says the company has earmarked investments to the tune of US$ 50 million which will be funded internally. “The fundamental agenda behind our M&A lookout is to get our hands on the advanced technologies (Gen 3 bearings) for special products such as new-age cars, bearings used for generating wind power and other areas,” he signs off.