Bharat Gears Ltd. (BGL), India’s largest manufacturer of gears for commercial vehicles, farm machines and construction equipment, is aiming to make a complete transmission set-up to OEMs instead of just supplying key components. It is to be mentioned that BGL currently manufactures a wide range of ring gears and pinions, transmission gears and shafts, differential gears and gearboxes mainly for automotive clients spanning across segments like heavy, medium and light commercial vehicles, utility vehicles and off-highway vehicles. The publicly-listed firm, which commenced business in 1974, is running three divisions – Gears, Furnace and Automotive Components.
In an exclusive interaction with MOTORINDIA, Mr. Surinder Kanwar, CMD, Bharat Gears, at his office-cum-plant at Faridabad, Haryana, said: “We are one of the world leaders in gears and transmission technology and thus are bringing to our clients the finest in gear and transmission technology. Our long-term goal is definitely to make a complete transmission set-up. At present, most of the OEMs in India are developing their powertrains in-house. But in developed countries, they outsource complete gearboxes to a specialist manufacturer. Unfortunately in India, they prefer to follow the insourcing route to keep a firm check on the vehicles’ overall costs. But let me tell you we can offer a superior product at a much more competitive rate. So I am sure we will be able to become a holistic transmission supplier in the country once the market matures.”
When asked to shed some light on the USPs of its product lines, Mr. Kanwar stated: “We have developed many capabilities on our productlines. We have also developed software solutions in-house, which optimise the various parameters of gears in bevel and transmission. We have developed state-of-the-art crown wheel and pinions for a variety of applications. Moreover, our engineers are dedicated to optimise gear profiles in bevel and transmission gears with a view to maximising the power density as well. They also regularly analyse metallurgical parameters of all gears with a view to improving the gear life at optimum cost.”
It may be recalled that BGL entered into a technical collaboration with Holcroft of the US for manufacturing furnaces from 1983 onwards. It had also entered into a technical and financial collaboration with ZF Friedrichshafen AG, Germany, in 1985 for 22 years for manufacturing gearboxes. The homegrown firm was founded by Mr. Surinder Kanwar’s father, the late Raunaq Singh, who was instrumental in strengthening BGL to a formidable position it is in today. Under his dynamic leadership, BGL has now become a major global supplier of automotive gears and heat treatment furnaces.
Meanwhile, in its relentless efforts to meet and exceed the needs and demands of its customers, BGL has made rapid progress in the international market. Its delivery expands to nations across Europe, the US, Mexico and Asia. Leading OEMs like New Holland Tractors, John Deere Equipment Pvt. Ltd. (JDEPL), Escorts, VST Tractors (Mitsubishi), TAFE, Ashok Leyland, Carraro India, Mahindra & Mahindra, John Deere Coffeyville Works (JDCW)-USA, TMA-USA, Toyota Kirloskar, Dana Corporation and Spicer India. Several OEMs source their complex gears and furnaces requirements from Bharat Gears.
As it aims to become a global player, more countries, clients and product lines will be added in Bharat Gears’ roster in the medium to long term, “We are on the point of inking a deal with two big league OEMs. While one of them has visited us multiple times; another one has already sourced some samples from us. We are doing pilot runs for the second one. Once these orders flow in, our turnover will go up manifold. As far as new markets are concerned, we have already entered Brazil and Mexico last year. We are also looking at South Africa and China as the next export destinations.”
However, Mr. Kanwar has categorically maintained that it will be going for inorganic growth only if the seller is ahead of the current technology curve. He maintained: “We were earlier close to buying a firm in Europe or the US. But we backed out because we couldn’t find any synergies with us. Their technology was not a compelling proposition for us. But we are open to acquiring any company located anywhere which has a formidable customer base and is equipped with next-generation technology. The ballpark figure for the acquisition is $50-60 million. By 2017, we should be taking over a company.”
Bharat Gear’s manufacturing facilities are located at Mumbra near Mumbai, Faridabad near Delhi, and very recently at Lonand in Satara disrict. Currently, nearly 3.5 million transmission gears are churned out per annum across the three plants employing 1,200 people. Due to the recurrent downturn only 65-70 per cent of the output is utilised. Once all the existing capacities are utilised, the company will be building its fourth facility at Dewas in Indore. Land has already been allotted by the Madhya Pradesh State Industrial Development Corporation.
With niche markets in the OEM segment being serviced from the Mumbra plant, BGL felt the need to penetrate the untapped replacement market that accounts for 20 per cent of its business. The fresh capacity needed to address the opportunity was achieved by the amalgamation of Universal Steel & Alloys Ltd. with BGL under a scheme of rehabilitation sanctioned by BIFR effective April 1, 1998. The facilities so acquired at Faridabad were upgraded and expanded in May 2000.
“We are expanding big time in the aftermarket space. Our goodwill is very strong there as people give priority to our product lines. Our aftermarket vertical includes other verticals like allied components like clutches also. We intend to expand aggressively in this space too. At present around 80 per cent of our revenues is generated from OEMs and the balance from the non-direct channels. But in five years’ time, nearly 25 per cent of our business will be derived from the indirect market,” noted Mr. Kanwar, who was ACMA President during the inaugural ACMA Automechanika show in India.
Talking about its future course of action, BGL is keen to diversify into non-automotive segments which are having some sort of backward linkages with its existing business. As the CMD of the company pointed out, “We are already in the agricultural vehicle segments. We are looking very seriously at the defence industry as the new PM is propagating Make-in-India policies in the country. After two years, we will also be rolling out hi-tech industrial gears after consolidating our existing operations. We might also be looking at aviation and aerospace industries.”
Mr. Kanwar is also confident that, despite recessionary headwinds, BGL will be able to more than double its current turnover to Rs. 1,000 crores by 2020. Out of the projected turnover (comprising both direct and aftermarket business), nearly 80 per cent will be derived from the domestic market and the balance from the overseas markets.
“Last financial year, we registered a turnover of Rs. 456 crores. We are expecting a slight increase in growth during this fiscal. But we will surely achieve the four-digit mark by 2020, out of which at least 25 per cent will be garnered from the aftermarket. We would like to manufacture the entire transmission or axle in our future course of action. We are looking to become a full-fledged Tier-I component manufacturer as that will become our biggest revenue generator,” concluded Mr. Kanwar.