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Shriram Bearings turnaround hinges on IT, new product-mix

Kohinoor Mandal

KOLKATA, Feb. 21

SHRIRAM Bearings Ltd (SBL) hopes to turnaround in two years or so under the stewardship of the new promoter, Mr P.C. Sen, former chairman of Peerless General Finance, who had bought 69 per cent stake in the company from Mr Arun Bharat Ram.

SBL, which is to be renamed as SBL Industries Ltd, would soon shift its registered office from New Delhi to Kolkata. It is changing its product-mix to increase profitability and would diversify into software development and construction of steel houses.

Mr Sen said that SBL had recently received some enquiries from Saudi Arabia. ``Every company is diversifying into software development. In SBL, we have skilled IT manpower. We would like to utilise them more. The company has received some queries from Sa udi Arabia for the development of a petroleum process software,'' Mr Sen told Business Line.

SBL has also entered into an agreement with the city-based Precision Technik, for marketing and construction of steel houses. The raw material is produced by Precision Technik.

For the year ended September 30, 2000, SBL registered a turnover of Rs 17.23 crore and a net loss of Rs 5.50 crore. Mr Ajay Jain, CEO, said that the company hoped to break even (just on cash) in the next two-three years, but during the current accounting period (October-September), losses might not be wiped out.

``Certainly, we would be reducing our losses during 2000-01, but we may take another year to register profits,'' Mr Jain said.

For the current accounting period ending on September 30, 2001, SBL is likely to register a turnover of Rs 18 crore and a net loss of Rs 2.5 crore.

``The bearing industry is going through a bad patch. Leading companies are either closing shop or reducing workforce. In such a scenario, we are bettering our position every month,'' Mr Jain added.

The 39-year old SBL is listed on the Kolkata, Mumbai and Delhi stock exchanges and the management is considering to change its current accounting period to April-March.

SBL's manufacturing unit is located at Ranchi and its capacity is about 15 lakh ball bearings every month. According to Mr Sen, the company would be producing more for electric motors and pumps, heavy material handling equipment and heavy vehicles. ``We are the original equipment manufacturer (OEM) of Bajaj Auto. But we will not increase our exposure to the automobile sector since margins are falling. Moreover, payment terms are getting worse every day,'' he said.

The company has a share of 5-6 per cent in the retail ball bearing market. In the electric fans industry, it holds about 10 per cent share. Ball bearings for fans account for about 75 per cent of the Ranchi unit's capacity.

Recently, the company took a new plant in Ahmedabad on lease for producing taper roller bearings for six and eight-wheeler diesel engines.