Ravi Raghvan, CEO, Bharat Firtz Werner Ltd (BFW)
Please take us through the journey of BFW…
BFW is 52 years old now. We started off as a joint venture (JV) with Fritz Werner of Hermanyand but during the early 2000 we acquired the stake of Firtz Warner. Today, it is a Kothari owned company. Kothari group has businesses across industry segments including pharma, textile and machinery among others.
Three years ago we acquired majority stake i.e 90% at MATEC, which is based near Stuttgart, Germany. It manufactures bigger size of milling machines. The whole idea behind this move was to have all the varieties of milling machines under our brand name. This has also helped us enhance our reach in the global market.
We aim to be among the top 20 global machine tool manufacturers in the world and we will grow organically and inorganically to achieve that. BFW employs close to 900 people and has distribution network across the globe including India.
Tell us something about BFW recent acquisition of Proteck.
I will start with why and how.
There were three objectives behind that:-
- To increase the portfolio of the product.
- Grow through addressing more vertices and applications.
- Grow through geographic spread.
So in order to increase our reach and enhance our portfolio we acquired these two companies MATEC for milling and Proteck for turning. We were manufacturing vertical turning machines for the last three years. For horizontal turning machines it was better to acquire or grow organically so we looked at companies who have very good technology product and Proteck was the one that fit into our requirement the most.
When you acquire a company or get into a JV, you of course use their distribution network, but what about technology? How do these two companies work in developing the products?
First of all we believe in technology and all our acquisitions are in sync with that. So when we acquired MATEC we looked at the technology superiority. Same stands for Proteck, it has very good experience and knowledge when it comes to turning machine.
Now with this acquisition we have different sizes of turning machines, from small to big size, from LM guide ways to hardened box guideway. We have standard machines, customised machines, single axis and multi axis among others. So within a mix of what we developed in-house to what we acquired has a huge synergy of products in the turning business.
Added to that we have milling. There are various applications where you need milling and turning. Our combinations of products from BFW, MATEC and Proteck are fully equipped to fulfil our customers demand when it comes to multiple applications like milling and turning.
With these acquisitions we have also managed to get some of the best talents in the industry for design and production and with BFW having a great set of engineers, we can and we do develop technologies together.
When it comes to technology and R&D, Indian companies are still said to be lagging. Your views…
I would say we are lagging in what we say is real R&D, we are not very strong in research but focus more on product development. Some still confuse product development with research activities. At BFW we have separated our engineering into three parts:-
- Transactional engineering – We have existing products but if a customer demands small change in the machine, this group does it.
- Product engineering – Where we develop new products and platforms. The target for each development centre is that they develop a new platform of machines.
- R&D – This is pure R&D, which means trying new things, different lubrications, materials and techniques. This is pure research work.
Collectively, I can say our expenditure in R&D is around 2%, which is huge according to the Indian standards but low if compared to the global standards. Having said this, we will keep on increasing our R&D activities.
Tell us something about your exports…
Export is only about 5-6% of our overall sales, but we are aiming to increase it by 8% in the next 2 years. We don’t want to export a lot through BFW and that’s why we acquired the company overseas. They represent BFW globally.
We are also developing products for the global market, which means it will be jointly produced in Germany and India. So, the Indian operation is predominately for the Indian market as we see huge demand here. More than 50% of machine tools in India is imported. If we continue to produce quality products, which BFW is known for,India itself is a huge market to grow.
Tell us something about the current scenario of the CNC market?
Lots of machines are imported in India and this is a huge opportunity for Indian companies. With the ‘Make in India’ program, I believe we have a huge role to play to bridge this wide import export gap. The market may be stagnant or slow for may be another 3-4 months, but we expect it to bounce back by the end of this year.
I think Indians can develop good technology machine. The basics of the Indian machine tool industry is strong and India is capable of developing machines according to the global standards.
I don’t think, that the need for export for Indian companies are so high because the local demand itself is so huge. As India aims to increase the manufacturing industry’s share in GDP to 25% from the current 16%, this points to the fact that we will need more and more machines to manufacture.
What are the other emerging sector for machine tool builders apart from automotive?
Automotive industry is definitely a puller, other industry’s demand may grow and saturate but automotive will always be the largest consumer of machine tool. But apart from automotive, aerospace, die mould and defence is growing significantly in India, so these are the avenues that will generate huge demand in the years to come. Apart from this, infrastructure too has a lot of ground to cover. This will give rise to demand for infrastructure related machinery and that would certainly demand for machine tool.
The world is moving towards smart technology. Your take on this..
We are working on some smart projects but they are still in a very nascent stage. Smart technology means enhancing the predictability of the machine and fortunately the data that CNC machine produce is huge. So how intelligently we can use that data to understand our machine will be the future. We are working on such a machine and it will be ready before the next IMTEX.
You have set up a vision 2020 to be among the top 20 companies globally. How do you think you can achieve it and how will you enhance your global foot print?
There are three things:-
- We will have to continue to increase our product portfolio.
- Expanding the reach in other industries and application. We not only make standard machine we also make SPMs which is our forte.
- We would expand our global reach by exporting from here or through our companies abroad.
These three things are the most critical for us and I believe we are very much in sync with it. This year we have set a target to double our turnover in the next three years and we will grow organically and inorganically to achieve that.
Till now we haven’t seen any Indian company in those iconic top 20 or top 10 lists. But now three of India’s largest companies are targeting it. Is it achievable?
There would be 10 companies from Germany alone, so why not India. As you know, this is the only economy that is growing. If small countries like Germany, Japan can do that why can’t a country like India with huge demand. The biggest strength of India is its huge domestic demand and fortunately today manufacturing doesn’t contribute significantly in GDP like in many other developed countries. We will be growing more than 8% in GDP growth in that manufacturing contribution is so low so if you put the mathematics together, either we can never get the GDP we are planning which is impossible and not sustainable, so we have to get that and if we have to get that manufacturing has to happen and if that happens machine tool will grow.
