Kirloskar-Gadre alliance to launch compact gensets

Kirloskar Electric Company Ltd. (KEC), a major player in the electric motor, alternator and other electrical engineering equipment, recently diversified its business by launching compact gensets in the 2.5 KVA to 15 KVA range.

The new gensets, brand named ''Denki'' (meaning ''electric'' in Japanese), are being made in alliance with Gadre Industries of Kolhapur, who would be supplying the gensets’ engines. Gadre Industries have been making engines for a number of applications for two decades and even exporting to countries like Egypt, Saudi Arabia, and South Eastern countries.

The engines have been developed jointly by KEC and Gadre Industries, said Vijay Kirloskar, chairman and managing director, Kirloskar Electric, at a low-key launch at Panvel near Mumbai recently.

The lower range gensets, which would meet the power needs of small businesses, commercial complexes, cinema houses, agricultural pumps and lighting in rural areas etc, are being sold on the plank of compactness, ease of use, mobility, price and the Kirloskar assurance of quality and service.

Thus, the Denki range has a push-button start and a mono-block set, both of which are said to be firsts in the country. In a 5,000-unit-per-month market that has hundreds of players, both from the organised and unorganised sector, Kirloskar plans to target a market share of 20 per cent in the initial years, going up to 30 per cent by the third year.

In the first year, Kirloskar hopes to sell 1,000 gensets per month, which, he expects, will bring in a sales revenue of Rs 60 crore. "Our gensets, priced 10 per cent below other branded gensets, will score on the Kirloskar assurance of robustness, quality and service," says Mr. Kirloskar. He banks on the company''s 100 strong authorised service centre network and 150 strong factory trained service engineers and technicians to back his statement.

The major focus of the company with regard to these gensets is the rural sector, which was also the reason for its launch at a small-town destination like Panvel. "These gensets are targeted at the rural market," reiterates company president and chief executive officer (CEO) Mr. P S Malik.

Bangalore-based KEC has been in the business of electric motors, alternators, electrical engineering equipment and generators for over four decades. But it has seen a decline in the past few years, steadily moving down from a peak turnover of Rs 525 crore in 1995-96 to Rs 315 crore and net losses of Rs 56 crore in 1999-2000.

"We have gone through a wide spectrum of problems and issues," says Mr. Kirloskar. "After 1995-96, we began seeing problems -- in pricing, order booking, general decline. The electric industry saw no new orders, with the cement, power, steel, sugar, construction industries, all going into a recession." Simultaneously, it had embarked on an expansion programme, investing Rs 150 crore, which, with a declining offtake, compounded the problems further.

During the past two years, the company undertook a ''right-sizing'' exercise, including shedding staff (1,000 out of 4,500, and another 500 to go in the next three months), talking to suppliers, freezing prices and salaries, stopping overtime, closing a number of operations and outsourcing many others.

"We intend to keep only key operations such as winding, final assembly, test, paint and design," says Mr. Kirloskar. The company has already outsourced close to 50 per cent of its operations, and intends to extend it to over 60 per cent.

Apart from arriving at a leaner, meaner organisation, the company made efforts to stress on quality as per the Six Sigma requirements. "Now we talk of rejection in terms of ''part per million'' rather than in percentage terms," says Kirloskar. The exercise, which he describes as a "gut-wrenching and ego-beating" one, has begun to pay dividends. The resurgence, which began last year, was set back by a three-month-long strike, which set the company back by Rs 30 crore a month.

"This quarter will see the company making cash profits. We have a good pending order position of Rs 100 crore on direct orders, excluding those given to dealers," says he, and expects to close year 2001-02 with a turnover of Rs 360 crore.