As Indian infrastructure develops and the industry modernises, there are tremendous opportunities opening up for the bearings industry. A rough estimate of the Indian bearings market can be pegged at $2 billion, which has been registering a CAGR of 20 per cent. Agith G Antony, finds out the details.
The Indian economy which is driven largely by domestic demand was not only spared of the worst of the downturn but is now placed very well to make the most of the upturn. Most of the companies have used the downturn to trim the fat and although it has been a somewhat painful process, the future looks promising. While the Indian consumers maintained their spending even in the downturn, capital investments were put on hold by many companies. This impacted the industrial segments. As the government increases its thrust on the infrastructure build, the economic growth will accelerate.
“As Indian infrastructure develops and the industry modernises, I see tremendous opportunities opening up for the bearings industry. As we move forward customers will look for better and cleaner technologies and more value added services (like maintenance of equipment, reliability monitoring, remanufacturing) that keeps their equipment running longer and more efficiently. Companies should be in an excellent position to provide their discerning customers with the best in industry end-to-end solutions from design to aftermarket services, says Ajay Das, Managing Director, Timken India.
“Though the Indian market is competitive it is in a growth phase that is similar to what China experienced. Being No 1 in China and having seen them through this important phase we are very experienced in catering to this phase of growth. Although the financial crisis is over economies all over the world are still feeling the effects. China and India have proved to be the beacons of light in this crisis and we feel that our products will continue to provide the ideal solution to customers who are looking for strong quality and value proposition. We are targeting strong growth and hope to double our size in three years, says Nishant Vora, Director and General Manager, ZWZ Bearings India, which has recently forayed into the Indian market.
With its entry, the $1 billion ZWZ Group is aiming to expand into the $2 billion Indian bearings market, which has been registering a CAGR of 20 per cent. Says Zhao Yang, Global Sales Director, ZWZ Group, “We have always wanted to strengthen our presence in India with long-term plans. With the Indian economy marking rapid strides, we find it an opportune time to mark our presence. We aim at becoming a prominent supplier to major industries in India and are launching a complete range of products that are ideally suited for Indian customers.”
Backed by its manufacturing and technological capabilities, ZWZ Bearings India has identified key growth sectors for supply of bearings. Accordingly, it will supply its high quality and precision bearings to actual users and Original Equipment Manufacturers (OEMs) in the industries like steel and metals, power, mining, paper, cement, machinery, engineering, petroleum, construction and infrastructure and railway. The Indian arm will first establish a network of long-term channel partners across the country with strong presence in select metro cities. As an early market initiative, it will launch about 5,000 types of industrial bearings in India and gradually take its portfolio to 15,000 products. ZWZ owns the intellectual property rights of all their manufactured products. Given the bearing manufacturing range, size and production capabilities, ZWZ India would be benchmarking against all the major bearing manufacturers operating in India and will compete with the top five manufacturers.
In India, ZWZ Bearings will supply middle, large and extra large diameter bearings upto 6 m diameter. As ZWZ Bearings are well-known for its shorter production lead times in comparison to other players, the same practice will be followed in India. Says Vora “We are committed to supplying high quality, high precision, world-class bearing products with better delivery and compelling value.”
Speaking about the current market scenario, Ajay Das says, “The current size of the bearings market inclusive of exports would be approximately $1.2 billion. With rapid industrialisation, the Indian bearings industry has more than doubled over the last five years and has registered annual gains well above both the regional and global averages. With increased infrastructure spends, this trend should continue into the next five years as well. India is among the fastest growth markets for bearings.” He further adds, “The organised segment should account for approximately $900 million. About 40 per cent of the total demand is met through imports with the balance being met by indigenous products.”
According to Ajay Das, “Nowadays, engineers and technologists are already working on new possibilities. For example, planetary gear systems are used to transfer power in a variety of industries, from automotive and agriculture to aerospace and defence. Conventional systems have evolved to the point where further refinements can only result in modest performance and capacity gains. Also, the future will witness technologies which help in efficient ways to create, transfer and control power. These technologies can have endless societal impact, from improved energy efficiency that saves businesses and consumers money to reduced emissions that help sustain our environment.”
Speaking about the changing customer preferences Ajay Das points out, “There is an increasing trend of designing and manufacturing of heavy industrial equipment in India which has resulted in customers asking for design and application engineering knowledge and assistance. In many applications, bearings are the limiting factor in increasing the power density of the equipment and also one of the first components to get damaged. Hence, working with customers, to help them make optimum design choices is an important customer expectation now. Finally customers are asking for more competitiveness and responsiveness from the bearing industry, which would require companies to regionalise production bases closer to them.”
On the potential of the aftermarket, Nishant says, “The potential from the aftermarket is very good. The import bearing business which we estimated as $1.2 billion is for either OE Manufacturers or actual users. The OEMs use it in the machinery that they make for sale to various industries. Actual users use it as a replacement in their machines which they have in their plants to produce various industrial products. For example, steel and power plants will come in the category of actual users as they buy bearings to replace in their machines being used to produce steel or to generate power. OEM customers generally prefer to buy directly from manufacturers, where as actual users buy from dealers as well as directly import. As such, the aftermarket consists of dealers as well as actual users. It is very difficult to bifurcate percentage of aftermarket but as per our estimates it is around 75 per cent.”
Talking about the major challenges Ajay Das has this to say, “As India builds its infrastructure, the bearings industry will witness a huge demand surge, especially in large size bearings. Also, as consumers get more demanding and product liability and safety issues get more stringent, there is a need for a qualitative leap in the performance of the bearings. Meeting these two requirements in a competitive fashion is the key challenge for the bearings industry.” He further adds, “The slowdown in the economy and demand apart, the industry has had to face increased cost of production due to the rise in price of inputs especially steel. On a similar thread cost-competitiveness due to higher import duties on raw materials (steel tubes, steel bars, grinding wheels, etc), also has been a dampener.”
Nishant to says, “The industry faces challenges from lots of low cost and low quality manufacturers. To differentiate a bearing for a consumer is very difficult as technology and precision levels are not visible to the naked eye. Often, users are fooled into buying low cost products as they promise same performance and the users land up losing a lot of money in downtime. The only way around this is closer contact with users and improving our visibility and communication, with them. Another challenge is that of spurious products. Here again, education of the consumer and also emphasis by the user management has to be high. Additional legal measures are also possible.”
Threat of counterfeits
In the last two decades, counterfeiting in general has grown by a whopping 10,000 percent, globally. While there has been much reporting about consumers being cheated by counterfeits in music, film, home electronics and designer clothing, a far greater risk lies in industrial counterfeiting of items such as tires, seals and bearings. All these products are safety-critical and fake versions pose a real threat.
Ajay Das says, “Counterfeiters pose a threat to the industry. Low-quality duplicate bearings not only lead to crucial downtime for customers but also tarnish the quality and brand value of superior manufacturers. Efforts have to be taken by manufactures to educate customers on the importance of using genuine high quality bearings.” He adds, “Everyone who buys, sells, mounts and uses bearings can be adversely affected by counterfeits, so it is in their best interest to be on the lookout for them. Manufacturers of products containing industrial bearings may be held responsible for damages. We want purchasers to realise that counterfeiting is a widespread and serious problem.”
Says Nishant, “We look at counterfeiting very seriously and view it as a criminal offence. It is also life-threatening as bearings are used in several high speed applications and if substandard bearings are used, then it could result in large and catastrophic breakdowns. We are addressing this problem through educational and legal means.”
“Counterfeiting also violates intellectual property, such as patents and trademarks. Because counterfeits look like and are marketed as genuine, premium-brand products, it usually takes a trained expert to identify them. Premium manufacturers invest continuously to develop their technology and improve the quality and value of their products. When counterfeiters copy the look of industrial bearings, and use respected brand names that aren’t theirs, they are infringing upon the rights of the manufacturer. The World Bearing Association (WBA) has launched an awareness campaign to inform users about safety hazards arising from counterfeit bearings. Our initiative is aimed at sensitising the public on the dangers associated with counterfeits,” Ajay Das sums up the situation.