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`Bearings industry likely to see more polarisation'

Our Bureau

CALCUTTA, Feb. 15

THE bearings industry, both abroad and in India, will see more `polarisation' in the next two years, in order to be a significant player in a scenario where mergers would be the order of the day in the user industry, according to Mr. J.R. Patel, Vice-Cha irman and Managing Director of FAG Bearings India Ltd.

Mr. Patel cited the coming together of major automobile companies, as a case in point, and added that the coming years would see large bearing companies merge to be able to influence factors such as pricing. He was speaking at the Eastern India Ball Bear ing Merchants Association's (EIBBMA) symposium on the industry's `Mission 2000'.

The domestic scenario is going to see more vendor consolidation with buyers looking for one or two suppliers and strategic sourcing and long-term contracts would become the order of the day. Currently, there are 12 organised vendors in the industry and t his would come down by half in the next five odd years, he observed.

The domestic demand for bearings was about Rs. 1,800 crores and replacement accounts for about Rs. 800 crores. Going by past experience, he said that the industry is likely to grow at about eight to 10 per cent. This could even see an increase, as invest ments flow into the user industry.

The bearings industry had an estimated total investment of Rs. 1,600 crores and actual production in 1998-99 was about 157 millions, valued at Rs. 1,170 crores. The current fiscal would see actual production touch about Rs. 1,250 crores.

He touched on the challenges facing trade and said that change would be the operative word for survival. The future would see industrial demand shift to authorised stockists,

service stations, shrinking number of dealers, an emphasis on overall reliability and after-sales. The concept of multi-layers and mega-dealers may emerge where survival would depend on low margins and high volumes.

Mr. Mathew W. Happach, Director, Sales and Marketing, Timken India Ltd, stressed the need to ``adapt and survive'' in the event of constant and increasing change and competition.

The Internet would bring a paradigm shift to distribution and the way in which business is run, with e-commerce giving the consumer all his requirements on the different brands existing in the industry, putting the employee out of the picture.

Meanwhile, companies are increasingly providing service contracts, where consumers are provided complete service by the same organisation from which they had bought the product. Mr. P.C. Sen, Chairman of Shriram Bearings Ltd, however, pointed out that th ere was room for more, as the number of dealers and distributors in the country was `minuscule' compared to the size of the country.

The future would see more frictionless bearings and their miniaturisation. Outlining methods on how the local industry could battle competition, he sounded a word of caution about competition from low-priced bearings from China.