A strong mechanical base, sprawling state-of-the-art manufacturing facilities in three locations, and a tradition of engineering excellence spanning over a century are the core strengths of Walchandnagar Industries Ltd. (WIL), the home- grown engineering enterprise founded by the patriot-technocrat-visionary Late Seth Walchand Hirachand. With quality and excellence embedded in its DNA, WIL is making a significant contribution to the space program of the country today by developing and supplying critical components required for the satellites. Carrying the sobriquet ‘Metal Men’, WIL is known for its heavy engineering set-up fully geared to undertake critical manufacturing. Its capabilities in EPC and turnkey engineering are also well-known. Mr. P.K. Balasubbramaniian converses with Mr. G.K. Pillai, Managing Director & CEO, WIL to understand the attributes and wherewithal of this engineering major which is exploring new frontiers in high-tech manufacturing. Excerpts:
Q. Where does WIL figure in the area of high-tech manufacturing? What have been your achievements in this area recently?
WIL has actually been involved in the area of high-tech manufacturing for over three decades now. There are five distinct areas where we have been doing work in this niche domain with various government agencies:
Nuclear Power Plant Equipment Manufacture of critical and core components like Calandria, End Shields and Heat Exchangers :
We have been one of the pioneers in the private sector to partner with Nuclear Power Corporation of India (NPCIL) and Bhabha Atomic Research Centre (BARC) to manufacture & supply such components to various nuclear power plants in India including 220 MWe Reactor, 500 MWe PHWR Reactor, 500 MWe PFBR and 700 MWe Reactor. As an added capability, WIL is in its last stages of executing a project primarily related to Sodium Piping and Chimney (Supply and Erection) for the 500 Mwe PFBR at BHAVINI, Kalpakkam.
Missiles Components :
We are one of the very few companies in India today who specialize in the manufacture and assembly of Motor Casings for Missile programs – both strategic and tactical i.e. AGNI, AKASH, ASTRA, B05. Bharat Dynamics Ltd. (BDL) is our major
customer in this arena.
Defence Equipment :
WIL has been closely involved with the ATV (Advanced Tactical Vessel) program to manufacture equipment like Weapon Containers and Launchers for Nuclear Submarines. On board integration work at Ship Building Centre, Vizag on the indigenously built Nuclear Submarine is also one of our ongoing activities. We have also manufactured and supplied equipment like Mobile Bridges & Launcher Assemblies (both wagon mounted and truck mounted) in the past.
Components for Launch Vehicles : WIL has been a strategic partner for the Indian Space Research Organization (ISRO) and we have proven the model of public-private partnership in this domain. Various core components of launch vehicles – for both PSLV and GSLV programs like motor casings, strap-on motors and various segments have been manufactured by WIL and have successfully performed during launches. While all the launches done by ISRO have had WIL made components, it is notable to mention our role in the launch of Chandrayaan, Mangalyaan and the recently launched GSLV-C6 carrying the GSAT-6 satellite.
Gearboxes : Our offerings in this area are quite diverse ranging from high speed, low speed, planetary and marine gearboxes. These are designed for various applications/industries including Sugar, Cement, Steel, Paper, Hydel, Fertilizer, and Petrochemical. Our marquee offerings are the heavy duty gearboxes designed specifically for the Indian Navy (Frigates, Corvettes and Submarines).
Q. How have you stepped up your capabilities in recent years to take on emerging challenges in high-tech manufacturing?
Our efforts to scale up and consolidate our already proven capabilities in high-tech manufacture revolve around the following three key-themes:
- Scale : Most of our offerings today especially in the defence business group (defence, aerospace and missiles) have been developed after a long iterative process wherein specific skills related to materials (and their metallurgy) and manufacturing processes have been developed and honed. We now want to scale up our volumes in these areas so as to derive the benefits of economies of scale. This is being done through focussed capital investments (e.g. purchase of specialized automated equipment like machining centres), in-house expansion of sheds and integration areas, etc and also strengthening our supply chain of supporting bought-out items. Adequate availability of land at our factory location in Walchandnagar puts us into a favourable position as far as such expansion (and consequent scaling up) is concerned. As a strategic asset, we also have a 56 acre plot of land available along the water front in Dahej, Gujarat which gives us the leverage to fabricate heavy equipment (e.g. Nuclear and Defence) which could be transported via sea to various locations.
- Skills : Continuous skilling and re-skilling of our workmen and supervisory cadres in areas like welding, machining, fitting and integration are being done by us. For example we have a special “Welding Development Section” wherein welders chosen to work on specific joints are trained and qualified to the satisfaction of our discerning customers. Meeting the stringent quality requirements of all our customers mentioned earlier is our primary focus and hence “Skill-Development” is very important. It is primarily through such on-going efforts that we have developed welding procedure specifications for a wide variety of ferrous and non-ferrous materials. A project management approach is also implemented for all our long cycle manufacturing jobs so that program managers are able to deliver the right product within constraints of timelines and budgets. Specific training towards acquisition of project management capabilities is regularly provided to the personnel concerned through training programs – both internal and external.
- Technology and Engineering : Any organization catering to this niche domain has to be at the cutting edge of technology and engineering and that is exactly what WIL’s attempt is. We have an in-house division called as “Walchand Technology Group” which supports various hi-tech manufacturing divisions in product and process development as well as troubleshooting in addition to dedicated divisional engineering teams. We are in the process of upgrading skills in this area – especially skills complementary to our core areas like hydraulics and electronics and control systems as well as composite materials. We already have existing tie-ups in some of these areas for specific project purposes. In short, while our core strength is Mechanical Engineering, we are well aware of the need to have a diversified portfolio of engineering expertise and that is what we are in the process of building.
Q. What are your offerings in the EPC business?
Over the years the EPC business (Sugar Plant Machinery, Co-generation and Cement Plant Machinery) has been the mainstay of our topline growth. In case of Sugar & Co-generation we offer end-to-end turnkey solutions (design, manufacture, supply, erection and commissioning) of complete Sugar Plants (500 TCD to 26,000 TCD). We cater to supply of independent units like Sugar Milling Plants and Centrifugal Machines (batch and continuous type). We also design manufacture and supply Boilers both for Co-generation at Sugar Mills and also for independent Power Projects. These are biomass based Boilers and their combustion technology enables usage of a very wide variety of such fuels. As far as the recent set of projects are concerned, we are in the process of setting up Milling Plants and/or Boilers for three Private Sugar Plants in Maharashtra and also one Sugar Plant in Kenya. Bigger projects like the 12 Sugar Mill Modernization & Co-generation sites in Tamil Nadu (Tamil Nadu Electricity Board) as well as for Tendaho Sugar Factory in Ethiopia are also on in full swing. Municipal solid waste based Boilers, Atmospheric Fluidised Bed Combustion Boilers and Waste Heat Recovery Boilers are some other offerings which we want to further strengthen. Apart from our conventional offering, one area which is under consideration from our end is solar power where we could develop complementary capabilities in sourcing and erection.
As far as Cement Plant Equipment is concerned, we have a diverse set of offerings – complete cement plants (upto 2 MTPA capacity), grinding units, vertical roller mills and ball mills, pyro section, separators and blending silos. We have successfully commissioned 48 complete cement plants including 11 export projects (primarily in Africa and Middle East). Currently we are in the process of executing a Pet-coke crushing facility at ACC’s cement plant in Gagal, Himachal Pradesh.
Going ahead, we would like to further strengthen our project management expertise in EPC and bid for new projects keeping a close eye on inherent profitability of each project. Over a period of time, EPC tends to become commoditized, thereby creating unsustainable pressure on margins and also cash flows. WIL would like to be selective going ahead so that we achieve growth but not at the cost of profitability. I have already mentioned that Centrifugal Machines for Sugar Plants is also one of our stand-along offerings. Being a short lead time product where we have proven technology, performance and very good brand name in India, we would like to expand this particular segment of business in a big way globally.
Q. Is Exports a thrust area for you? What are the recent overseas orders you have executed?
For any diversified heavy engineering company like WIL, it is essential to have a strong exports portfolio especially given the cyclicality of our businesses. We see Exports as a strategic opportunity, more so for our Project Businesses like Sugar, Cogeneration and Cement. As far as Sugar & Co-generation business is concerned, we are executing a project in Ethiopia (Tendaho Sugar Factory) which, after phased completion, would be one of the largest facilities in the world based on tons of sugarcane crushed per day. In addition, we have also successfully executed Boiler Supply & Installation projects in Africa, Latin America as well as in New Zealand. South East Asia is also a strategically important region for us where we are in the process of building our presence. In the case of Cement Plant Equipment, some of our key clients are based out of Africa and the Middle East. Given the thrust on infrastructure in the SAARC region, we are also actively pursuing opportunities in countries like Nepal, Bangladesh and Sri Lanka and even Myanmar. We feel that given WIL’s expertise in mid-size Cement Plants and supply package offerings, these countries hold a lot of promise for us. While the hi-tech manufacturing divisions are focussed mainly on India, we would eventually like to scale them up to serve global customers as well. The government’s policies in the realm of defence equipment such as offset policy, defence exports policy are seen as enablers for companies like WIL to be a part of the global supply chain for such equipment.
Q. What are your comments on the economic scene and the business prospects for engineering majors like you?
As an organization, we are quite hopeful that the Indian economy will eventually come out of its below par performance seen in the recent years – especially in the capital goods sector. Two consecutive years of drought, policy logjams due to lack of political consensus as well as tepid global growth may have dented the prospects of a quick turnaround as was expected after May 14 when the new government was sworn in. However we must keep in mind that enabling policy measures like “Make in India”, focus on indigenization in sectors like Defence and Aerospace, innovative approach taken in the context of renewable energy sources as well as path-breaking reforms like Goods and Services Tax, etc would have a certain amount of gestation period to kick in effectively. For companies in our sector to scale up, land acquisition for industrial purpose becomes a critical factor. While policy measures in this regard met with lack of consensus, it is worth noting that WIL with its adequate land holding may be in a good position to overcome this constraint. Fortunately for companies like us, we are in the midst of a downturn in the commodity cycle with key raw materials like Steel seeing a significant reduction in prices.
This gives us a temporary advantage since raw material costs come down. However we are also of the opinion that there could be several smaller procedural reforms that could be undertaken by the government in order to help private players like us in the engineering sector such as shorter lead times for payments in case of government contracts, lesser bureaucracy in matters like amendments to contracts, as well as flexible and faster contracts management. All in all, we are quite hopeful that over the period of the next two years there would be a significant improvement in the Indian economy.