National Engineering Industries is taking to smart manufacturing in a big way to not only ride out the industry slowdown but also to be future-ready in an era of disruptions
18 Nov 2019 | 4728 Views | By Mayank Dhingra & Sumantra B Barooah
National Engineering Industries, the engineering arm of the CK Birla Group, which holds a dominant market share in the Indian automotive industry with supplies of bearings under the NBC brand, is facing the heat from the current slump in the market and is deploying steps to curtail costs in a ...
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National Engineering Industries, the engineering arm of the CK Birla Group, which holds a dominant market share in the Indian automotive industry with supplies of bearings under the NBC brand, is facing the heat from the current slump in the market and is deploying steps to curtail costs in a tough environment.
With the current adverse times for the Indian automotive industry where the market has collectively seen an overall drop of 17 percent over the first six months of the fiscal, suppliers and OEMs alike are trying to cope up with the situation by taking different approaches to ensure the viability of their respective businesses.
NBC Bearings, a major supplier to passenger vehicles, two-wheelers and commercial vehicle OEMs in India too is going through a rough patch but the company is adopting few corrective measures to improve its situation.
In an interaction with Autocar Professional, Rohit Saboo, president and CEO, National Engineering Industries, spoke about the company’s massive cost reduction program and its efforts in the supply chain to reduce inventories at a time when finished goods are not being taken up in the market.
It has also adopted some Industry 4.0 tools at the operational level to further boost efficiencies. Some of the examples, as told by Saboo, include use of over 350 smart electric meters across the organisation to gauge electricity consumption and curb wastage. The chief executive told that the company has recovered the cost of installing these meters in a little over three months' time already.
“When things are going good, one does not realise how much is being wasted. We are also working on how to save material, for instance, if we are able to cut out even a single more ring from the raw material, it gives us big cost savings as well,” Saboo said.
“We are also using a lot of these digitalisation and Industry 4.0 methodologies to improve the human efficiency so that we do not need to hire more manpower. But, as far as people are concerned, we haven’t retrenched anyone as of yet, neither do we plan to lay off our employees, until and unless we are in a real need to do that,” he added.
Revised investment plan
While a lot of the industry’s earmarked investment has been put on hold accounting to the de-growth in the market, companies are keeping the capital aside to sustain operations until there are signs of recovery.
“We had to rearrange our investment plans. Our initial budget was Rs 250 crore which included capex, expenditure on technology and R&D, and expenditure on quality- related equipment and measures. We are going forward with our plans on investment in the areas of R&D and quality as we know that they will have a positive impact in the future.”
“However, as far as our capital expenditure is concerned, whatever was ordered, we are now trying to defer our purchases. For this, we are talking to our suppliers for better coordination and while they are getting similar requests from other customers as well, we have agreed to some measures. On the other hand, what we did not order, we are pushing it to the next year. Roughly 30 percent of our capex has been moved to 2021,” adds Saboo.
While the government’s recent indirect steps of reducing the corporate tax rate and infusing fresh liquidity in the market are some long-term corrective measures, Saboo believes that if a further intervention still in the form of a GST reduction is done, right in the festive season, things could spring back to action.
“If the government can give some incentives on a temporary-basis for a couple of years, it can really help revive the industry. But, all of it will need to be done now as the festive sentiment would go away very soon. Just like the stock market, the automotive market runs on sentiments quite a bit.
“Moreover, next year we will be faced with BS VI implementation, so even if there’s a positive impact during the festive season, I am not sure how long it will remain. The government should allow for a smoother transition period between BS IV to BS VI because inventory management is a big issue, and if companies are left with older stock on April 1, everything would need to be scrapped. That would be a national waste,” he said.
Electric mobility to soon have a bearing on the bearings business
With vehicle electrification being the next technological leap in the automotive sector the world over, and with EVs coming with a significantly reduced number of moving parts, bearings would eventually lose their dominant place in the electric car of the future.
“Typically, in an electric vehicle, there are 50 percent lesser bearings compared to internal combustion-engined vehicles. An average conventional compact car can have anywhere between 25-35 bearings while an EV would have 15-18. Having said that, right now, there is very little worry as the volumes are very low, but going forward it will start to show its impact.
“As far as development is concerned, to counter this impact we are ready with EV transmission and wheel bearings and we are already supplying them to customers in Europe as well as in India,” adds Saboo.
While the company will continue developing new products as per the changing requirements of its existing customers, it is also eyeing adjacent areas to reduce its dependency on the automotive industry.
“Right now, our business is too much dependent upon automotive supplies, close to 70 percent of it, and going forward we would ideally want to reduce that and increase our share in other areas such as railways. We have already developed new bearings for them,” he says.
“While we are talking too much about electric mobility, unless it’s a diktat like BS VI, I think we will have some decent amount of time to chalk out our strategies,” he concluded.
(This article was first featured in the November 1, 2019 issue of Autocar Professional)