Bangalore: Ayear ago, state-owned construction equipment maker Bharat Earth Movers Ltd (BEML) decided to leverage its decades-long expertise in designing and manufacturing equipment such as road movers and rail coaches and become an outsourcer for overseas companies looking for manufacturing solutions.
BEML has made some progress—it now makes auto components for Ingersoll Rand, an industrial products company in the US. But it has a more ambitious objective of becoming a vendor to overseas firms looking for design-to-manufacturing solutions. It wants to bid for “end-to-end solution” projects: design, test and build prototypes followed by commercial production at its plant in Bangalore. “We don’t want to miss an opportunity in the areas where we are strong. This will add value to our business,” said V.R.S. Natarajan, chairman and managing director of BEML.
It isn’t a big trend yet, but many Indian firms have made or plan to make a small beginning in ‘manufacturing outsourcing’ in a country that has made a mark for itself offering tech and back-office services, billing over $31 billion (Rs1.27 lakh crore) in exports last year.
Several companies such as Wipro Infrastructure Engineering Ltd, the precision-engineering subsidiary of India’s third largest software exporter Wipro Technologies Ltd; Quest (short for Quality Engineering & Software Technologies Private Ltd), a Bangalore-based engineering services company; and Axiom Consulting, another Bangalore company involved in product design and development, are all bullish about their ability to manufacture the products they help design for their customers.
Others such as BEML, Bharat Electronics Ltd (Bel) and Titan Industries Ltd, India’s largest watchmaker, are working the other way, leveraging their manufacturing expertise to offer design services.
BEML, which has around 300 engineers in its technology division in Bangalore and Mysore for engineering services and manufacturing outsourcing business, has appointed Infosun Inc., a US-based engineering services company, to market its expertise.
Along with other state-owned units, it is locally pursuing contracts from defence and aviation companies supplying India with equipment and planes. The latter are mandated to source 30% of the value of orders from local suppliers.
Hindustan Aeronautics Ltd, the country’s largest military aircraft maker which is owned by the Union government, designs and makes components such as forgings for engines built by UK’s Rolls-Royce and France’s Safran.
Bel, the public sector defence electronics major, aims to increase exports 10-fold to $100 million in the year to March 2008 from $11.6 million last fiscal, by offering design to contract manufacturing services. “It is at the subsystem level that we can bring in our design and manufacturing abilities to our customers,” said H.S. Bhadoria, director of the Bangalore offices for the company. ’Subsystems’ such as printed circuit boards are the building blocks for electronic devices.