The Hindu : Widia India on recovery path

Online edition of India's National Newspaper
Friday, Mar 07, 2003

Business

Business

Widia India on recovery path

By Our Special Correspondent

BANGALORE MARCH 6. If the operational results of the last few months are an indicator, the Bangalore-based Widia (India), a leading manufacturer of carbide cutting tools and special purpose machine tools, will soon be out of the slump which had dogged it from the year 2000, following recession in the Indian engineering industry.

"We have seen a 40 per cent growth in business recently with the monthly turnover reaching Rs. 20 crores," claimed Kumar Kanetkar, the new Managing Director of the company, at a press conference in Bangalore. "We are now seeing a capacity utilisation of 70 per cent on a two-shift basis, much better than a year ago. At this rate, we hope to reach a 12 month sale of Rs. 225 crores, including Rs. 40 crores of exports, by June 2003 and an operational profit of 10 per cent". Mr. Kanetkar moved to Widia from TCS six months ago as the Executive Director-Finance and Administration, after the U.S. cutting tool giant, Kennametal, took over the Widia Group worldwide in 2002.

At present, Kennametal holds 76.28 per cent of the equity of Widia India which includes the portion held by Widia Germany and the Indian promoters. Kennametal is awaiting Foreign Investment Promotion Board clearance to make an offer for the remaining amount of equity which is widely held among the public. (Widia India is now on an 18 month accounting cycle since it is switching over from January to December financial year of the past to a June to June financial year used by Kennametal.)

Part of the resurgence of Widia's fortunes is due to a pick-up in the Indian manufacturing sector, particularly the automobile industry. But part of it is also due to the restructuring and improvement initiatives taken by the new management, like rightsizing the workforce (some 150 were reduced through VRS to bring the strength to 1530), reducing receivables, reorganising the operations into four strategic business units (Machine Tools, Mining and Construction Tools, Metal Cutting Tools and Metal Forming Tools) and adopting lean manufacturing and office practices.

According to Mr. Kanetkar, Widia's association with Kennametal will be a win-win situation for both. Widia India will get access to the vast technological resources of Kennametal (the U.S. company is No. 2 in its line in the world and makes over 1.20 lakh products against 15,000 made by the Indian company). In turn, Kennametal can use Widia India as a resource hub for the Asia-Pacific region, where Kennametal has no manufacturing unit except a small one in Shanghai which makes mini-drills for drilling holes in printed circuit boards.

Ultimately, Widia India will become integrated in the global supply chain of Kennametal, which can create many growth opportunities. Mr. Kanetkar also sees tremendous potential for growth of the construction tools business in future due to the emphasis placed by the Government on infrastructure development, as evident in the recent budget.

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