At a time when the global economy has taken a downturn and the Indian automobile industry in the doldrums, German auto-components major, Industriewerk Schaeffler INA Ingenieurdienst Gmbh – or the INA group as it is better known – has set up a fully owned subsidiary, INA Bearings India, to make needle roller bearings at Urawade near Pune.

The INA group, which is the largest privately held industrial group in Germany and has over 30 manufacturing units worldwide, makes precision engineering products for automotive, machine tool, material handling and general engineering applications.

Its major focus, however, is in the automotive sector. Its product range includes roller and specialised ball bearings, linear systems, belt tensioners and engine components.

The group has been supplying needle roller bearings and other anti-frictional bearings and components to the Indian automobile sector over many years. It has now thought fit to put up a manufacturing base here.

"It's the same chicken-and-egg story," said INA Holding president and chief executive officer, Dr Juergen Geissinger, who was in Pune to inaugurate the new plant, explaining the company's decision to set up a manufacturing base in the country at this juncture.

"The question always is whether to put up a plant without business, or first create business and then put up a plant. Since our credibility with our customers had already been built up here and that and we had the basic volumes of local sales, we took the decision to start manufacturing it right here."

Besides, he pointed out, India was an important market for INA. "It is one of the fastest growing economies in the world and to penetrate the huge potential of the market we needed to be close to our customers," he said.

On the question of timing, Biswarup Dhar, managing director, INA Bearings India, said, "When a new company starts operations, it takes time to train people and absorb the technology. If we start now, we shall be ready to meet the demands of the upturn when it comes.

The objective is to have a manufacturing base to keep up with the opportunities. With the automobile sector going in for new designs and new generation vehicles, there is an opportunity of growth. Putting up the base is more of a strategy to capture the market with a long-term vision in mind.

With the advent of new generation vehicles – be it four-stroke two-wheelers or next-gen cars – the company expects the demand for high precision components to rapidly rise.

Last year, the INA group made a sales of DM 15 million (Rs 30 crore) selling an assortment of imported components, including needle roller bearings, cylindrical roller bearings, overrunning alternative pulleys, special types of ball bearings, tension pulleys, to Indian vehicle manufacturers. On the other hand, it expects to reach a sales of Rs 10 crore on sales of needle bearings alone in the first year of production, from local manufacture.

"As a privately held group, we have the flexibility to take decisions independent of investor or analyst opinions," observed Mr. Geissinger. Thus, despite the downward trend in the world economy, and uncertainties in the market, the group had decided to go ahead with opening a new plant. "We are investing into the future," he said.

The needle roller bearing unit, with an investment of Rs 16 crore – Rs 8 crore of which will be spent in the first year – is expected to yield a turnover of Rs 30 crore by the year 2003, at full capacity. "We will continue to import the other products that we have been importing, and focus on localising the manufacture of needle roller bearings, needle cages, needle bushes, belt tensioners and clutch bearings.

Since the objective of the company is to meet the customers' demands at the shortest possible time, it plans to start production through the assembly route, importing the components, and gradually integrate the manufacturing process, working backwards.

Once the plant achieves stabilisation in production, the Pune plant will be integrated into INA Bearings'' Asia-Pacific supply chain network comprising two other plants, one each in Korea and China.

"Accordingly, the products to be manufactured at each of three units has been rationalised and distributed," said Mr. Dhar, adding, "the Pune plant will be the Asian base for needle roller bearings."