The Hindu Business Line : Shanthi Gears on expansion mode — Still on the look out for strategic partner

SHANTHI Gears Ltd (SGL), a major player in the industrial gears segment in the country, is investing about Rs 50 crore during the current fiscal to ramp up production capacity and to put the company into an exclusive league of manufacturers of high-tech gearboxes for speciality applications.

The fresh investment will take the capital expenditure the company has incurred in the past four years close to Rs 100 crore, much of which had come at a time when there was widespread industrial recession.

In an interview to Business Line, Mr P. Subramanian, Chairman & Managing Director, SGL, said the company has placed orders with world leaders, such as Gleason Pfauter, Mazak, Makino, Phoneix and Haas Automation Inc, for products such as grinding machines , gear hobbing machine, hypoid grinder, hydraulic tester etc. He expected the installation of the machines to be completed in the last quarter of the current fiscal.

He said once the machines become operational, the company would be able to produce high-end gearboxes for windmills up to 3 MW capacity becoming the only manufacturer in India to produce windmill gearboxes of such high capacity. This would also enable the company manufacture gears for defence helicopters.

The other products include planetary gearboxes, marine gearboxes, high precision ground Bevel gears for aviation and high tech applications etc.

Moreover, they would also help SGL to enhance the quality of existing range of gearboxes to international levels, propelling SGL to the exclusive club of manufacturers of gearboxes for global applications. Already, the company derives only 35 per cent of its income from standard industrial gearboxes while the rest comes from gearboxes for speciality applications.

Mr. P.K.R. Kurup, Senior Vice-President, SGL, said the company had made much of its investment during a period when there was widespread industrial recession. This helped the company to source its requirements at a very competitive price from the equipment suppliers. Asked whether he has been able to zero in on a strategic investor the SGL CMD said, "We have not got the correct party still." He said he was looking for a company manufacturing the same product internationally. There were six or seven companies globally involved in the same business of gears manufacture and it would be `extremely advantageous' for them since India would be a cheaper manufacturing source for them.

Replying to a question as to whether he was looking for organic or inorganic growth Mr Subramanian said he wanted to focus on a single product-industrial gears, and his expectation is that in the next three or four years, SGL would become an internationally known company. To meet its captive requirement, the company may go for a small forging unit and any excess capacity could be used to meet the needs of others.

Asked about the impact of the investments made in the past few years on the company's top line and bottom line, he pointed out that the net sales, which was at Rs 56.27 crore in 2002-03 had gone up to Rs 85.84 crore during last fiscal. The net profit had more than doubled during the same period from Rs 6.51 crore to Rs 13.23 crore. In the first half of the current fiscal, the turnover was nearly Rs 53 crore and net profit Rs 8.3 crore and he expected the full year net sales to cross Rs 100 crore.

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