Balu India readies for next phase of growth
Balu India has targeted production of 3.5 lakh crankshafts for this fiscal, which is nearly five times the current output of 75,000 units.
Balu India, an export-oriented unit, meets the needs of some large Tier-2 suppliers in the US as well as the European aftermarket. While these two contribute to 20 percent of turnover, the balance comes from Latin American countries like Chile, Argentina and Ecuador as well as the Middle East with Egypt, Iran and Turkey being large markets. All in all, Balu India's crankshafts are exported to 61 countries. It caters mainly to the tractor segment followed by commercial vehicles and passenger cars. Thanks to capacity constraints, it has backorders of six months.
To overcome this drawback, the company has bought an entire plant assembly of CNC machines from one of the largest tractor producers in the US and slated to come here next month. Balu India is also in talks with the same company to acquire two more machines for cylinder blocks and connecting rods. However, the American company has almost finalised plans to set up a plant for this in neighboring Pakistan.
GEARING UP FOR THE FUTURE
The new machinery line is being installed at the company's 1,000-square-foot facility in Belgaum, Karnataka. The American company will send 12 engineers, who have worked at the European plant for 20 years, to India for a year to train Balu India's own engineers. The line will become operational in January 2007.
"Except for Bharat Forge, no other company will have the kind of machinery which I am importing," maintains Singh. While Bharat Forge is a volumes player, Balu India's advantage lies in having a variety of over 350 types of crankshafts ranging from one cylinder to six cylinder. "No manufacturer in the world has a catalogue of 350 crankshafts. This is my selling point. Nearly 80 percent of my production is for models/engines that are not present in India. They are specifically made for the export market," he adds.
The new line of machines will focus on large crankshafts for commercial vehicles. Balu India's crankshafts already go into Mercedes trucks operating in markets like Iran and South Africa but it is now working towards getting orders from Volvo and Scania as well. The added capacity will help the company move up the value chain as it targets selling directly to Tier-1 suppliers abroad.
Singh says that Balu India has the capacity and quality to compete with a couple of Spanish crankshaft manufacturers who are major suppliers to OEMs in Europe. The increased capacity again will help the company enter Brazil which is also a large manufacturer of crankshafts.
The other advantage the company has over global counterparts is cost. Over the years, it has been earmarking substantial spend for R&D. Of its 250 employees, 20 engineers are totally involved with product development. Balu India's crankshafts are indigenously made using local raw materials. The fact that there are no imported inputs makes its products all that more competitively priced.
The next two years are critical for the company. The new line of machinery at the plant will take about 2-3 years to turn successful and reach 100 percent capacity utilisation. Before that happens, Balu India will begin selling to local OEMs though the focus will always remain on exports. Singh says that the company also plans to acquire a forging plant in the next couple of years which will help it diversify into other products. Until then, the focus is to grow in the same segment: crankshaft exports.
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