—Ranbir Singh, President, Association of Indian Forging Industry
Discuss the broad contours of the Indian forgings industry and its contribution to the manufacturing sector.
The Indian forging industry is an integral part and a major contributor to the manufacturing sector. Forgings are required by almost the entire manufacturing sector, from general engineering, capital goods, to power generation and distribution, to name a few, which are the backbone of the manufacturing sector. Besides, we have defense, railways and the automotive and the aircraft industry. The Indian forging industry is recognized globally for its technical capabilities. With an installed capacity of around 37.7 lakh tonnes per annum (tpa), Indian forging industry has a capability to forge variety of raw materials like carbon steel, alloy steel, stainless steel, super alloy, titanium and aluminum.
Tell us about the two extremes of the Indian forgings industry—the large players in the organized sector and the small/tiny unorganized players.
Forging units are usually classified basis the installed capacity of the forging unit. The forging units may be classified on the basis of physical capacity. So we have: 1. Very Large (capacity above 75,000 tpa); 2. Large (capacity between 30,000 and 75,000 tpa); 3. Medium (capacity between 12,500 and 30,000 tpa); 4. Small (capacity between 5,000 and 12,500 tpa) and 5. Very Small (capacity below 5,000 tpa).
Based on this classification 87 per cent of the total number of units falls under the small and very small category, while only about 5 per cent are large and very large units. The balance of about 8 per cent constitutes the medium sized units.
What is the current membership of AIFI and what has been the growth in membership in recent years?
The AIFI is an all-India body of the Indian forging industry and has close to 220 members across India. Currently, there are about 175 (ordinary) members and about 45 associate members of the association. The AIFI family commands large market share of about 80 per cent of the total production of the Indian forging industry. Since its inception AIFI has witnessed a steady growth in membership and we expect it to grow to about 250 within the next two years.
The products manufactured by the members range from rough forgings and machined parts like crankshafts, connecting rods, camshafts, shifted fork, steering components, crown propeller shafts, gear box components; crown wheel and pinions, front axle beams, rear axle shafts, earth moving link, railway wheels, flanges, pipe fittings to industrial valves.
What is the representation of MSMEs in AIFI’s membership? Is AIFI consciously trying to increase membership in this category?
About 62 per cent of the members of the AIFI represent the MSME sector. Presently there are no special programmes for this sector that are run by the Association. However, membership fee payable by a member is on a graded scale and is linked to its sales. Special programmes of the government of India for the MSMEs are disseminated by the AIFI. The association has been trying to increase its membership across all sizes of forging units.
We understand that the automotive industry is the biggest user of the forgings industry. Are there other emerging application industries?
The automotive sector currently accounts for about 61 per cent of the forging sales, while the non-automotive sector contributes about 39 per cent. However, going forward in order to de-risk and reduce its dependence on the automotive sector, the Indian forging industry is consciously making efforts towards upgrading technologies and diversifying product range to expand its customer base to emerging sectors including aerospace, energy, oil & gas, heavy engine parts, defence, construction equipment, power generation, power transmission and distribution. Today Indian forging industry is also trying to diversify into areas like electrical industry, oil and wind sectors.
How is the Indian forgings industry faring in terms of exports?
The industry is increasingly tapping 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.
The Indian forging industry, as a part of the manufacturing sector, has played a significant role in the Indian economy, with an estimated size of around Rs.20,200 crore in FY13. Of this, approximately Rs. 4,500 crore was attributed to exports in the same period.
With setting up of international purchasing offices (IPO) by major global OEM and Tier-1 industries lot of forging companies in India are expected to play a bigger role in their sourcing strategy. In order to meet their expectations the Indian forging industries have already expanded their operational spectrum to cater to finished and ready to assemble parts rather than supply of simple forgings.
With business sentiments having improved in India, in the coming years we expect to see improved business activity which will consequently push the demand for forging products as well as exports.
What are the key priority areas of AIFI to promote the growth of the Indian forgings industry?
AIFI’s key role is to promote and develop the Indian forging industry so as to meet the demands and expectations of the stakeholders. This, it seeks to achieve by improving and providing a conducive business environment for its members. AIFI also keeps its members abreast of the latest technology in forging and market intelligence.
Some of the key activities also include building and strengthening database of its members; developing, maintaining and promoting global standards; participating in and organizing conventions, seminars, conferences, etc;
AIFI is also actively involved in emerging areas like technology up-gradation and achieving cost efficiencies with energy conservation by collaborating with government institutions like PCRA and other developmental institutions.
The association also regularly interacts with suppliers of raw material (mainly steel producers), user industries (primarily the automobile industry) and educational institutions in the field of forging technolog
Encourage proactive dialogue between the industry and Government (both in terms of suggestions for policy making and problem-solving), as also between the industry and the market (User industries — domestic and global).
What does the “Make in India” campaign mean to you with respect to the Indian forgings idustry?
The Make in India initiative has definitely been a good move in the right direction to give the necessary boost to the overall manufacturing sector. It has created an all-round positive business environment and sentiments. The campaign has definitely been fruitful for certain segment of the forging industry and we are anticipating an increase in demand from the non-auto sector in the medium and long term.
Having said this there are certain issues that needs immediate attention. The need of the hour is to address issues like faster clearance of mega infrastructure projects which have been pending for quite a long time. Investments in the development of overall infrastructure being executed on priority, both in the public and private sectors, will result in pickup of demand, among other things, in commercial vehicles, construction industry and capital goods sector. All these will have a multiplier effect on the Indian forging industry.
The Indian Commercial vehicle Industry is flat today. Unlike the European and American countries, India does not have the system of scrapping the old vehicles. Even today we find the trucks manufactured during the 1970s plying in the highways. Once the government implements the latest emission norms, it will force the older vehicles to go out of the road thereby creating market for new vehicles and it can kick-start the growth in the commercial vehicle sector which is a major customer for the forging industry.
How do you see the road ahead for the Indian forgings industry and what would be the principal growth drivers?
The Indian forging industry needs to leverage the market opportunity through focused approach on increasing productivity, upgrade of technology rather than mere capacity expansion. The industry has to constantly look for opportunities to increase productivity. The future of the industry does not look as dismal as it was 2-3 years back. It will not be out of place to assume a growth rate of about 10 per cent from FY17 onwards.
Today the global market demands high quality and consistency in production and there is a huge liability for failure. In this context, cheap labour does not have much relevance. Hence the forging Industry is looking for automated production to achieve the above objectives.
Several forging plants are being shut down in the developed nations and it is up to the Indian forging community to grab the opportunity.