Delux Bearings, based in Mumbai, is investing Rs 15 crore to set up a new plant in Pune with a capacity to produce four million bearings a year. The new plant, called DJR Delux Bearings, in tribute to the company's founder the late Dilip J Rathod, is a joint venture between Delux and the Amul group of Rajkot (which makes a range of automotive and diesel engine parts like crankshafts, connecting rods, taper roller bearings, diesel engines and spares).
DJR Delux Bearings will produce automotive ball bearings for clutch, steering and gearbox applications in cars, trucks, tractors and material handling. "The breakthrough here would be a newer type of technology in terms of designing, manufacturing and testing. We will make products for new- generation passenger cars and sport-utility vehicles," Kirti Rathod, managing director, Delux Bearings told Autocar Professional.
The company is importing machinery for its fourth plant from Japan and England while the manufacturing lines are coming from China. Trials will begin in October, covering a cycle time of around 75 days from the time raw materials first arrive to the complete rollout of a fully assembled and tested bearing. The unit will become operational in the first week of January 2007.
The Pune facility forms part of the company's expansion plan over the last two years. Delux has already put in Rs 15 crore in its three existing plants which saw capacity increase by about 25 percent. "The capacity expansion has allowed us to come up with 50 new types of bearings," said Rathod.
At present, Delux has a capacity to make eight million bearings at KCI Needle Bearings and another 1.5 million ball and roller bearings at Luxite Industries. Both facilities are located in Surendranagar, near Ahmedabad.The third unit, Galaxy Bearings located in Rajkot, has a capacity for an additional two million bearings annually. The plants are being used at 85 percent capacity.
Last fiscal, Delux achieved a turnover of Rs 70 crore as a group, an increase of 15 percent over the previous year. It is targeting an upward growth of 25 percent this fiscal, largely based on the expansion in the auto industry as well as its own initiatives to bring out new sizes of bearings for new vehicles that would boost its local and export sales.
Delux caters to the bearings requirements of Tata Motors, Mahindra & Mahindra, Bajaj Tempo, Piaggio, Munjal Showa and ZF Steering. It is now targeting Tata (for the Indica), Hyundai and Honda in the passenger car segment. "We have held talks and submitted samples. This should fructify by the year end so that we should get a complete level of business operational with them in 2007-08," said Rathod.
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Delux is also eyeing supplies of new types of bearings for four-wheel mini commercial vehicles like the Tata Ace. It has developed designs for the Ace and will be conducting trials with Tata next March. Similarly, the company is in talks with Piaggio to supply double-row angular contact ball bearing for four-wheelers. "Piaggio is conducting trials with its Italian counterpart. We feel early approvals to start trials within India should begin by December," he added.
The bearings maker is also targeting multi-axle (over 25 tonnes) trucks of MAN and International Truck and Engines Corporation in the commercial vehicles segment. In the two-wheeler segment, KCI Needle Bearings makes needle cages for Honda scooters and Kinetic Engineering. Delux is working on some new bearings to address the two-wheeler segment. Rathod said exports account for 15 percent of total turnover and the idea is to increase this by 25 percent each year for the next three years. Its exports go to Tier 1 companies in the drivetrain and suspension categories in the US, Canada, Mexico, Germany, Italy and England.
Delux is now exploring the option of entering Eastern Europe in markets like Slovakia. "A lot of labour-intensive work is shifting towards Eastern Europe. OEMs and some Tier 1 re-assembly and re-manufacturing are also moving there," he said.
The aftermarket segment also plays an important role in Delux's business and contributes to 55 percent of its business in India and 40 percent overseas. For the local aftermarket, Delux has 225 dealers and 750 retailers at key consumption centres and vehicle hauling clusters along the National Diamond Grid. It will be adding another 100 dealers in the next two years at Tier 3 towns. The overseas aftermarkets are Germany and the UK. "We have sales offices in these countries and find it more appropriate to do customer extension through the existing sales channels," added Rathod.
Delux is also tying up with a leading brand in two countries, which would give it the exposure to understand customer expectations and market trends. To keep abreast of technology, the company has realised the need to introduce more ductile and alternate materials in its bearings. The need for fuel efficiency in vehicles again calls for lighter, compact bearings. "KCI Bearings has introduced 45 polymide (needle) cages which are on par with best in class. These cages have yielded substantial savings in space, cost and performance for gearbox applications," he said.
Beyond bearings, Delux is exploring ways to diversify into providing aggregates like gearbox and clutch sub-assembly modules. It is presently in discussions with two Indian OEMs to take on the submission of aggregates for them. "By the first quarter of next year, we will definitely have a contract with one of them," said a confident Rathod.
He added the exercise would need more investments in R&D. The company is installing new- generation software for bearing design with an outlay of Rs 1 crore in fiscal 2007. The initial R&D would come from the OEMs themselves. The second part would then come from local research centres and international partners.