Consumer Discretionary

Diversification Strategy For Forge Based Component Manufacturers

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<p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><span data-contrast="auto">1/ Electric power trains are here and at much faster pace than expected. The traditional Auto manufacturers will be caught by surprise as non-entities are coming out with E vehicles and have already gone ahead of the curve compared to heavy weights.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">2/ Induction Motors will replace conventional power train and will be powered by battery, hydrogen or solar as motors is the right solution to mobility. Eventually, hydrogen will take over Charcoal based power sources;&nbsp;however,&nbsp;Govt. of India is targeting only 40% of energy from&nbsp;charcoal-based&nbsp;sources.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">3/ In India hybrids will come for some time as a stop gap arrangement and will help IC engine component manufacturers for few more years.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">4/ Demand projection of forging will become half in 5 years&rsquo; time.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">5/ Any component maker heavily invested in&nbsp;an&nbsp;IC engine segment needs to de risk by diversifying into other segments or components which will remain for next 15 years</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><strong><span data-contrast="auto">Prescription </span></strong><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">A/ Diversify into all ranges of bevel gears as bevel gear and planetary gears and differential would still be used before going to two variable speed motors take over.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">B/ Manufacture gears with complete teeth with just super finishing by machining.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">C/ Since dog teeth will be eliminated in electrical the gear configuration will be easy to make by forging.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">D/ Convert one of the&nbsp;lines&nbsp;for suspension parts as suspension is here to stay and heavier suspension due to battery weight. Add machining capability in suspension parts and sub-assemblies.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">E/ Dedicate one line for cold forming and nonferrous forging and titanium forging for aerospace engine blades, Hip&nbsp;joints,&nbsp;golf club etc. These are technologies that take time to be mastered.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">F/ Partner with an electric axle manufacturer to make integrated axle which can just be coupled with motor. Global manufacturers are much ahead now in this race.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">G/ If any investment in&nbsp;forging,&nbsp;then an investment in higher segment like forgings gears for construction or tractors however both segments also getting into electrical drives. This will de risk the heavily&nbsp;two-wheeler&nbsp;IC engine segment&nbsp;dependency and&nbsp;will take 3-4 years to develop new segments.&nbsp;However,&nbsp;Crown wheel and Pinion shaft will remain in the heavier segment and big planetary gear boxes at axle ends.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">H/ Alternate source of energy like wind and solar will require planetary gear boxes, solar tracker gear boxes, slew bearings and host of other gearing products.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">I/ Transmission of power throughout India, Africa will increase demand for forgings required for high tension lines.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">J/ Electric cars would be low floor level cars and will require better road&nbsp;infrastructure,&nbsp;so forgings demand for equipment like&nbsp;excavator&rsquo;s&nbsp;dump&nbsp;trucks.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><strong><span data-contrast="auto">Summary</span></strong><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p><p style="text-align: justify;"><span data-contrast="auto">So,&nbsp;the disrupting technology for mobility has arrived and will create blood bath during the transition of the complete business process.&nbsp;It&rsquo;s&nbsp;the next big thing after the horse cart was replaced by IC engine. Companies need to either&nbsp;rethink&nbsp;their business strategy or convert themselves into malls. There are many other forging&nbsp;requirements that is replacing the conventional auto engine and transmission based forging requirement. One needs to develop capabilities toward the same or it's going to be too late.</span><span data-ccp-props="{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}">&nbsp;</span></p>
KR Expert - Dr. Vasant Khisty