Kalyani Forge is looking forward to increasing its production capacity. One of the oldest and most established manufacturers of precision forged and machined components in India, the company has developed superior quality forgings through continuous improvement in quality control systems and technology upgradation. In an interview with Huned Contractor, Viraj Kalyani, outlined the reasons for capacity expansion and the bright future of the forging industry.
What is the current scenario as far as the forging industry is concerned?
The Indian forging industry is facing a slow down. There's not enough growth, and the ensuing fiscal may not bring good growth either. With the ever growing energy costs, which have shown a steep 36 to 38per cent increase, the forging industry is also suffering from compounding problems like slowdown in the automotive sector, non-availability of adequate power, and the high cost of fuel.
Given the highly volatile scenario of the automotive industry, how has this affected the performance of Kalyani Forge?
Under the current volatile scenario, Kalyani Forge has systematically identified and implemented cost reduction measures in its production processes and focused on enhancing each employee's productivity. The future looks encouraging for the forging industry in terms of the expected surge in global demand. As a result of liberalisation, more MNCs have entered the domestic automobile market. This has opened up more business opportunities for the company.
Is there a plan to lower dependence on the automotive sector and diversify to cover other sectors such as construction, engineering, energy, agriculture, mining, etc?
We make precision and machined forgings for domestic and international automotive manufacturers. Our plans are to lower the dependency on automotive components business from 75 per cent to 60 per cent in the near term. We have an installed capacity of about 25,000 tonne, and make forgings weighing less than 15kg. Our products include connecting rods, gears, axles and other forged components.
What is the strategic business and growth plan of the company for the next five years?
We are in the process of adopting a lean manufacturing strategy to reduce waste and grow aggressively through upgradation of the facilities as well as go in for low-cost production through automation. Kalyani Forge is adding capacity to emerge as a strong player in the industry with value-addition processes in manufacturing and design. Kalyani Forge has systematically identified and implemented cost reduction measures.
What kind of R&D is the company undertaking in the forging sector?
The company has consistently managed to be a globally competitive company with a lead in quality and technology. We have gained a reputation of being a preferred source of forged and machined components. As an organisation we have evolved through continuous innovation and technology tie-ups. As part of Kalyani Forge's overall strategy, the company's focus has been on developing value-added products for all market segments through research and development activities. Without losing focus of process cost reductions through increased yields.
What methods are being employed to make the operations leaner and cost-effective?
A state-of-the-art phosphating and bonderising facility has been installed to take care of special processes that need to be carried out before cold forging operations. The company has, through years of in-house research activities, achieved marked improvements in design and production technology to specialize in the manufacturing of a variety of intricate profile forgings.
What is the export status of the company? Is there a plan to tap new markets?
We are increasingly addressing opportunities arising out of the growing trend among global automotive OEMs to outsource components from manufacturers in low-cost countries. As a result, the Indian forging industry has been making significant contributions to the country's growing exports. In this context, I repeat, the future looks encouraging for the forging industry in terms of the expected surge in global demand. The entry of automotive MNCs in India has opened up more business opportunities. It has also helped exports. We export around 25 per cent of our overall production to global customers and this percentage is likely to go up in the future.
Is there any plan for capacity addition?
Kalyani Forge has two manufacturing plants in Pune. The hot forging and metal forms' division is at Koregaon, and a precision automotive component division is at Sanaswadi near Shirur. The company is planning to invest around Rs 200 crore over the next five years. As per the plan, the company will upgrade its current facility and key areas of operations. The company intends to increase the capacity utilisation to 75 per cent in the next two-three years from the current capacity utilisation of 55 per cent.
What kind of percentage growth is the company looking forward to over the next two years?
It would be tough to provide a specific number, or in percentage terms, the growth outlook. We are expecting a quick revival of the forging industry. We are looking at every opportunity to grow. While the company has been making its mark among global customers, we feel that there are opportunities to cater to small and medium-sized enterprises as well.