Though this is a detour from our regular operations, global sourcing has become commonplace. But most established licensors have become reluctant to license technology because todays licensee may become tomorrows competitor, the companys president S Sundar Ram told FE.
Considering that less developed companies and new entrants are finding it difficult to source technology, and also considering that RBL, unlike other global players, does not have significant global market share, it is in a position to make an entry.
RBL, which had a turnover in 2001-02 of Rs 107 crore, began manufacturing auto component brake friction material in 1964 and went through a long collaborative phase with TMD of UK. When this alliance fell through, RBL tied up with Nisshinbo, the Japanese market leader in friction material, a tie-up which currently make up a large part of RBLs current operations. When Indian Railways looked at global players for a possible licensing agreement for the manufacture of its own friction materials, RBL pitched for the deal and is now set to participate in the tender. Recently, the Railways commissioned a rail dynamometer at a cost of over Rs 3 crore to RBL, making it the only component manufacturer to be in such a deal.
RBLs after-market sales currently account for 42 per cent of total sales, while rail contributes 26 per cent and original equipment sales 27 per cent. Export is yet meagre at 5 per cent, and this is primarily why RBL has decided to participate in global licensing. Apart from the deals in Bulgaria and Jordan, RBL has received a large order from Sri Lanka for its railways. A deal with Hindustan Aeronautics Ltd, which is at an advanced stage of formulation, could well be RBLs foray into new products for the aviation industry.
RBL currently has a total market share of 30 per cent. This is representative of how fragmented the industry is, said Mr Ram, there are no quality barriers like in the European Union and this is why overseas players barge into the country with no extra test requirements, while companies like ours spend crores on quality testing our products to enter the UK. Sundaram Brake Linings, also in the market, takes second place in the friction materials industry.
This is a safety critical industry, said Mr Ram, and if we want to consolidate and emphasise our domestic strength, we need to place checks on how things enter this country.