With over 70% of its revenue sourced from automotive applications, the dampened market situation in India has hit National Engineering Industries Ltd., manufacturers of world renowned NBC Bearings. Nevertheless, as the company’s President and CEO Rohit Saboo tells Dhiyanesh Ravichandran, they are ready with BS-VI and EV products and will continue to spend high on research and development while exploring new markets.
There are good times, and there are bad times. Take, for example, the story of India’s leading bearings manufacturer and exporter, National Engineering Industries Ltd. (NEIL), which registered a robust growth of 20% in the last financial year thanks to a buoyant market scenario in both domestic and export markets. Besides, the company has been investing heavily in bringing next-generation bearings that are lightweight and support low torque geometry, aimed at the future needs of the automotive industry including for that of electric vehicles (EVs).
However, the current fiscal is unfolding in the most dreadful way possible, with no signs of growth so far.
“Recessions always come and go. But what we are facing right now is very different and the variables involved are too many, making it more complex to fight back. It’s been a sudden downturn; just a few months back things were pretty normal,” admits Rohit Saboo, President and CEO, National Engineering Industries Ltd. He adds that the situation is grim for suppliers since OEMs are clueless as to how many vehicles should they manufacture and what the ideal inventory levels have to be in view of the forthcoming festive season as well as the implementation of the BS-VI norms.
However, he agrees that the downturn seems to have been on the burner for quite some time. “Macro-economic issues like NBFC crises have resulted in low level of vehicle financing in the market, which has resulted in a massive drop in domestic demand for automobiles, more specifically commercial vehicles and agriculture equipment like tractors. The worst part is that the slowdown is around the time when a significant regulation like BS-VI is now on the anvil,” Saboo adds.
This has pushed NEIL to look for alternative streams of revenue in non-automotive applications like industry and railways. “We are trying to gain some traction in the non-automotive sector to offset the slump in automotive. We have to focus on any areas where there is some sign of growth,” he says. He does acknowledge that dampened market sentiments are present in various degrees in all sectors across the economy, but not as worse as automotive. Another area to focus on is exports. “About 20% of our revenue is from exports, and there is a decent demand for our bearings right now. However, there is a slight plateau in sales in the US and European markets owing to poor market sentiments, although for different reasons unlike that of the Indian market,” he observes.
As to whether NEIL regrets early investments in products for electric vehicles, Saboo states that EVs are always a safer bet for the future. “This is still the right time to invest in EV products, no matter how wavering the policies are because they are going to come eventually and script the future. Moreover, there is a very good scope for exports as the western markets and China are moving at a much faster pace towards electric mobility than India. It’s inevitable for both OEMs and suppliers to prepare at the earliest,” he adds.
“Personally, the slowdown is not going to break away very soon, and the impact is going to be really hard on the automotive industry,” he says. Yet, as a strong company, NEIL will continue to spend high on research to develop new bearings for varied applications and improve their efficiency and performance to give a better value proposition to its customers. “So that when the market bounces back, we will be ready with a much larger and wider portfolio,” Saboo declares.