Steel prices concern Turbo Gear

Amidst concerns over rising steel prices, Italian multinational Gear World launched its new thermal treatment plant for gear manufacturing in Ranjangaon near Pune on Tuesday.

Turbo Gear, an India unit of Gear World - a Carraro group company, however might not work as a sourcing hub, as planned before, due to increasing steel prices.

"The automotive, construction equipments and agriculture sector remain the most attractive business segment for Gear World. Turbo Gear alone has done business worth Rs 75 crore in India during last financial year and the same is expected to grow up to Rs 200 crore by 2010," Carraro group chairman and CEO Tomaso Carraro said, announcing the launch of the new plant based on gas nitriding process.

The group runs three companies in India namely, Carraro India involved in manufacturing of axels and transaxels; Turbo Gears that deals with gears, shafts and other components and Carraro Technologies, an engineering research and development firm.

"Almost 90 per cent sales of Gear World happen through Carraro group only while 10 per cent of total revenue is generated from independent clients. We are in a process to increase the revenue share of independent sale to 20 per cent in India," the CEO added.

The company is however worried over the steep rise in steel prices in India. "We have been sourcing components for our US-based clients from Turbo Gear in India. But the raw material costs, especially steel, have suddenly shot up here. If this continues, then we will have to look for another sourcing base in Europe," said Carraro Managing Director Guido Ghilardi.

The company does sorucing worth Rs 18 crore annualy to US and the same is expected to increase to Rs 30 crore by March 2009. "As of now, the prices of steel are equal in India and Europe. But for future, we are looking at having an independent sourcing base in Europe," Ghilardi stated.