As the Indian automotive industry is poised to become the third-largest in the world in the next decade, many component makers are going the extra mile in augmenting their presence. Among the auto parts industry, the one which is raking in the moolah is the bearings industry, which is essentially a technology and capital intensive industry as end products finds application in a vast variety of applications. In other words, any rotating machinery would require a bearing which is finding its way in aviation, automobile, railways, power, steel, mines, heavy earthmoving and all industries. The size of Indian bearings industry is tipped to be worth Rs 85 billion with a projected CAGR of 12 per cent over the next five years. Even though the growth has been a bit moderate in the last few years, there are some green shoots visible owing to the revival of the automotive and allied industries. Considering the high reliance of bearing industry on the automotive industry, the fate of bearing industry is largely dependent on the production
Ajay K Gupta, Managing Director, Kamtech Associates, states, "The Indian bearing market has brighter growth prospects, thanks to the enormous growth in automobile sector giving rise to demand for bearings. Most of the major manufacturers have got their capacities booked till 2020. Understandably, companies are looking for alternate sources for bearing supplies. This offers a huge opportunity for multinational players (both existing and new) exploring India as a manufacturing base. As more than 230 lakh vehicles across multiple segments are hitting the roads every year, more bearings will be bought by OEMs. So after five years, whenever the vehicle undergoes maintenance and overhaul, there is a bearing requirement on a repetitive basis. Furthermore, the 'Make in India' initiative will drive the OE segment and will result in a CAGR of above 12 per cent in the next five years. However, in aftermarket, the growth will remain stagnant. In case of Indian Railways being upgraded for higher speed, the advanced rail road bearing requirement would witness an unprecedented boom."
It is to be mentioned that bearings are mainly manufactured using high grade steel or alloy steel, which exposes them to global steel price movement. In general, raw material accounts for about two-third of company's cost structure or around 58 per cent of bearing manufacturer's revenue. The commercial production of bearings dates back to the late 1940s with the production of small and standard bearings. Over the years, there are over 20 large and medium sector enterprises which together rolled out close to 2 billion bearings (big, medium and small) annually.
Types of bearings
In India, close to 50,000 sizes of various configuration of bearings are required and the local established industry players hardly produce 5,000 sizes leaving the gap of 45,000 sizes for import out of which around 50 per cent are met by MNCs directly and the rest from CIS and Chinese imports. The bearings have been standardised globally, i.e. the boundary dimensions of the product is being laid down (Table 1).
User segments and
Demand for bearings is derived from two key user segments, automotive and industrial. Automobile industry is the largest growth driver for the OEM market as it accounts for almost 55 per cent of the total bearing market and within that space, OEM and aftermarket's share in terms of percentage is 55:45. Automotive bearings market, particularly the direct vertical, is totally organised. However, the aftermarket vertical is still unorganised to the extent of 45 per cent. Within the automotive segment, passenger car accounts for 22 per cent of the total OE requirements in automobile bearings, light commercial and heavy vehicle together would account for 20 per cent of the total OE requirement and the rest OE requirement is from two-wheelers. The automotive bearing manufacturers have enough business and growth rate and therefore no one seems to be looking to diversify into new industries.
Engineering sector, which accounts for 24 per cent of the total share, holds the second growth driver. The demand for bearings is also linked with heavy-duty industrial applications in rolling stock, rolling mills, heavy earthmoving equipment and other heavy machinery, accounting for 21 per cent of the total bearings market. However, demand in the latter category is met through imports and therefore does not have a significant impact on domestic growth.
India among the global pie
Industry analysts proclaim that the Indian bearings market has been growing at the same pace as the Chinese and other emerging markets and now accounts for about 5 per cent of the world bearing market. The world bearing market is poised to touch US$60 billion and is projected to grow at a double-digit growth. In India, the leading players comprise both the international manufacturers like SKF, Timken, FAG, NTN, ZKL, EBC and several local manufacturers such as NEI (NBC) NRB, AEC, ABC, ARB, GGB, Tata, and a host of other local brands. Many of the above players export their products to various developed and developing countries. Meanwhile, the domestic market produces 85 per cent of the automotive bearings and close to 70 per cent of industrial bearings, while the rest are imported. The locally made bearings are cheaper and competitively priced vis-ÃƒÂ -vis imported bearing other than from China (due to duty drawbacks offered by the govt there).
In India, all the major players have technology tie-up with their parent (SKF, FAG, and Timken) or with a foreign collaborator (NEI, NRB, and ABC). Bearings are mainly manufactured using high precision engineering process. The market acceptance among the organised players, be it Indian company or foreign company having a local manufacturing, is the same. However, there are many Indian and imported brands from China and CIS countries which also have a substantial market share. There are many applications where the leading players do not produce bearings so; CIS countries of Chinese make is the only option.
Most of the well-entrenched players have a robust R&D base and invest continuously on new design and next-generation technology. Reducing noise, vibration and harshness (NVH) are the old technology issues and antifriction bearings already have these features in design. Ceramic bearing is also not a new concept, and is used in a very small application. Sintered bearings can also be found in a multitude of applications, such as electric motors of vehicles, fans, household appliances and power tools. Using fine-tuned lubricants, sintered bearings run smoothly without requiring maintenance or service for their lifetime and are therefore very efficient. Sintered bearings are used whenever particularly low noise levels are required, loads are variable or little space is available. They consist of pressed metal powder whose pores are impregnated with a lubricant. The impregnating oil or fluid ensures permanent lubrication of the bearings. For major application, steel is the only raw material used.
Automation, the next big thing
The majority of the bearing plants are highly automated. Earlier bearing manufactures used to produce all components of bearings on their own. But now it is more of assembly and concentration to manufacturer of races, the rolling elements like balls, rollers, needles and retaining elements like cages and rivets are outsourced from other suppliers. Even forging and turned races are outsourced from vendors. In India, there are global vendors of quality turned bearing races. The bearing manufacturers now increasingly zero in on heat treatment, grinding and assembly apart from its R&D focus. This way, Indian bearing manufacturers have been able to produce bearing competitively. It is to be noted that the level of technology of bearings production is the same in SKF/Timken and local companies like NEI. Bearing is highly precision engineering product and therefore the technological advances are adopted by most of the manufactures quickly to stay in the quality and quantity race.
Risks and challenges
Bearing industry is contingent on the growth of automobile and engineering industry. Any setback in these sectors would pose risks and challenges. Besides, newer vehicles are designed in such a manner to have less number of bearings in various assemblies. Another major challenge that is plaguing the industry is rampant piracy. The piracy will still be there, as China is the major bearings producer wherein piracy is being nurtured. In China, one can get any international bearing brand produced in any factory. However in India, fortunately manufacture doesn't resort to it. There are many small manufactures in Rajkot, Jaipur and Punjab having their own small brands and can give bearings without brand so that one can produce any brand; this percentage is minuscule here.
The industry will invest more on design and development of precision class bearings. Technology research is being made for controlling the oxygen content in steel to improve the life of bearings. Most of the bearing manufacturers are busy in automation and keeping pace with the changing automobile manufacturer requirement of new design. Every new automobile launched has specific features in terms of driving, speed and comfort. So a bearing manufacturer is working hand in glove with the R&D inputs from these automobile companies and develop suitable bearings solutions requiring less and less maintenance. Today, the new vehicle coming in the market never faces any bearing related problem.