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With global supply chains looking at newer markets outside of China and recoveries in the automobile sector here in India becoming pronounced, auto component supplier and cutting tools firm, Birla Precision Technologies is ramping-up capacities across plants in Nashik and Aurangabad.
The company is also looking at a larger play in the mining tools and drills segment as it looks to take on Chinese imports and “dumped offerings” in the category. Among the five divisions of the company, drill manufacturing (cutting tools division) is the highest contributor to revenues.
Capex
According to Vedant Birla, Chairman and Managing Director, Birla Precision Technologies, around ₹50 crore will be put in by FY22. A 25 per cent plus capacity addition in drill manufacturing (hardware tools) facilities – up by 3 lakh per month from the existing 13 million – is expected around August–September of this year, under the first phase of expansion plans. The next phase will see additional capacities of another 6 lakh drills at a cost of over ₹25 crore and the line will be operational by end of FY22.
The company has also begun work on a new plant catering to agricultural tools (called Hathyar), under the ‘Atmanirbhar’ scheme. Work is on to develop heavy weight products used in the mining sector, Birla said.
“We foresee better growth in FY22 and increased demand in offerings including auto components, agri-equipments, hardware offerings like drills and so on. We see a market catered by Chinese players that can be tapped by specialist players like us,” he told BusinessLine .
Changing business queries
According to him, there is a distinct improvement in demand for auto component suppliers as car sales pick up. The “reversal cycle” will “sustain” and is expected to aid recoveries in the downstream sector with an increase in demand for cutting tools, drills and other allied offerings.
On the other hand, despite Chinese dumping and a price differential (lower price for Chinese offerings), there are quality and trust issues. This has led to increased queries both from Indian and overseas vendors.
“Domestic demand has picked up faster than exports. In the second quarter of FY22, as vaccination drives near completion in European nations and in the USA, we are hopeful of orders picking up. The stimulus package in the USA economy could aid recoveries for businesses there too. Amongst export markets, European ones are doing better than the USA though,” Birla said.
In terms of percentage growth, Indian demand is growing at 20 per cent over export orders. Export orders are coming back to pre-Covid levels, he added.
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