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Sai is a Hyderabad based firm started in 2001 as an incubated unit with ARCI. Beginning 2003, it has
moved to its own facilities and is now looking to move into new market segments where the technology
can be used.
A12O3
Coating
Operating
hardness
temp. (C)
(HV)
1100
980
Cr2O3
1350
510
WC-Co
1300
560
Cr3C2
NiCr
CoCrAIY
875
1000
400
1200
WTiC+Ni
1300
760
Cu+Ni+In
300
425
A12O3 -Ti
O2
950
700
Application field
The ARCI had originally sourced the DSC technology from the Institute of Problem in
Material Science, Keiv. In the last few years, it not only indigenized but also developed
an advanced detonation spray coating technology. Only ARCI presently has the
technology for the D-guns in India.
5500
5
2
30 80
1 10
30 100
10 20
10
<1
600
DSC
600 1200
2800
14
5
Due to the wide variety of components and machine parts used across different spectra of
industries, it was difficult to offer a generalized picture of DSCs unique positioning
advantages. The only generalized statement that can be made for positioning DSC
technology was that it offers several unique advantages in niche applications. In the
Indian context, some of these advantages include:
A manifold increase in wear resistance (typically by several orders of
magnitude) compared to other coating technologies available. For the
wire drawing industry it was estimated that using Sai Coatings
detonation spray gun increases the life of the coated wire in use by more
than 300%.
Almost negligible porosity resulting in great applicability where complete
protection of the substrate was critical.
Low substrate temperature allowing usage of soft substrates like
aluminum and copper.
Anti corrosion qualities of carbide and ceramic coating which were
otherwise difficult to coat.
A smooth finish allowing for maintenance of surface luster.
.
Sai Coating makes and sells the D-Gun to the companies that use coating on
components. So cable companies that have wire drawing functions can use the DGun to coat the wires. Turbine manufacturers can use the D-Gun to coat the
turbines for higher performance. At this point in time, Sai Coatings customers
were paying Rs. 15 lakhs to purchase a D-Gun and over its life, the gun can spray
coat more than 100,000 feet of wire (on wire upto 0.5 inch thickness) or 12000 sq.
feet of surface. The coating costs run at Rs. 1.50 per feet of wire and Rs. 20 per sq.
feet of surface area. Sai also provides initial training to the buyer free of cost to set
and run the D-Gun. By comparison, plasma coating and HVOF machines cost Rs.
11 and 18 lakhs, each respectively to the buyer.
Market Segments
Sai Coating who has adopted DSC technology, focuses on three different sectors. It
has developed the market in Wire Drawing, Textiles and Aero Components.
Nageshwar Rao, the CEO of the firm was looking at establishing and extracting
value through various pricing options for the technology for different market
segments.
In the wire drawing industry coatings have been developed for about 90% of the
critical components which operate in a hostile environment. Sai Coating has
captured about 15% of the total wire drawing industry in India.. Customers tend to
think that the present price charged by the competition was the same as that of Sai
Coating per feet of wire coated.
BHEL, which was the main turbine supplier in India, had recently approved the
thermal coating technology using DSC. The turbine valves and spindles used in
turbines form a good market for DSC Technology. Sai Coating has conducted trials
for application of its DSC technology for the turbines. These turbine blades need to
be refurbished with coatings depending on the intensity of their use. Nageshwar
Rao approached this segment as a solution provider to the problem of frequent
refurbishment/replacement of the turbine blades. Users included power stations,
national scientific laboratories, etc.
In the textile industry, requirements came in lots of 100 spindles and valves, which
was capable of filling 20% of the total annual capacity of one D-Gun. A D-Gun
Coating increases the life of the spindle from 1 year to 3 years (as compared to 22.5 years for HVOC and Plasma). In regard to the textile industry the application
was from guide pulleys. The coating enhances their life from 40 days to two years.
The basic cost of the pulley was Rs.275 while the cost of coating comes around to
be Rs.600. So though the cost was more than justified, hesitation arises from the
upfront cost was more than doubled.
In aerospace industry nearly 600 components can be coated using the D-Gun. It has
been specifically mentioned as a regulatory and safety requirement in the
maintenance manuals that many of these components either have to be replaced or
used after thermal spray coating for many components. Most of the refurbishments
were presently been catered by imports from companies like Praxair. Application
coatings for five components had been developed and the result had been positive.
This was one area where the criticality of the components was very high and
environment was hostile. For instance one of the components was priced at Rs.
1.75 Lakhs and it normally lasted for 2 years. It has to be replaced by new
component. DSC presents the opportunity to refurbish the old component, at a price
of Rs.15000, which can be reused for a third year.
DSC technology offers the aircraft and stationary gas turbine industries the means
to resist many types of impact, sliding and fretting wear, and low and high
temperature erosion and corrosion. Recently developed coatings were now being
applied as thermal barriers to reduce metal temperatures and for clearance control.
DSC coatings can also be widely used in the refurbishment of aircraft parts of both
civil and military aircraft engine components and as solutions to similar problems
in stationary turbines. Also coating for the airframes was extremely important due
to both the criticality of the components and the cost of replacing the components.
The environment in a steel mill stresses the equipment as it involves high
temperature, attrition and high pressure tasks. Components were often subjected to
corrosion under high temperature and hence require surface treatment. Rolling pins,
annealing surface rolls, cold and hot leveler rolls, guide rolls, squeeze rolls,
mandrels, zinc bath rollers and skin pass rollers were a few of the components that
require surface treatment to enhance the component life and performance.
Pricing strategy
There were two major factors preventing the attainment of desired growth rates for
the DSC technology. The first was the resistance to adoption encountered in the
marketplace due to the bureaucratic inertia encountered in the target segment
accentuated especially so far as public sector firms were concerned. The second
was the nature of the customer. While segments by industry were a good way to
understand the market potential, Nagehswar Rao was discovering that the thinking
of the customer varied depending on the location and background of the manager.
For SMEs in the private sector that operated from non-metro locations, often there
were no established internal procedures within the potential customer for
purchasing items like a DSC Gun that might be bought once every 5-7 years.
Getting to know the person appeared to be a criteria. The concept of a budget
was also less certain in one of the three D-Guns that he had sold, he had been told
that there was no budget but when he managed to get higher up the hierarchy, a
budget was created.
Competition: There were other substitute technologies that were available. DSC
was positioned between HVOF and Plasma technologies in terms of the
performance and pricing. Plasma charges around 25% less than the DSC does,
while HVOF charges 25-30% more than DSC. In terms of performance (please
refer to Exhibit 2) DSC appears to provide better value than the other technologies.
Value to Customer: The market was mostly unaware that the DSC technology
exists and hence was not aware of the potential benefits that they can obtain from
using it. Nageshwar Rao estimated that in the wire drawing segment and turbine
blades the benefits of using DSC were as follows
50,000. A larger turbine blade (for a 500MW plant) may cost upto Rs. 3 lakhs
per blade and its life increases from 2 to 3 years.
Conclusion
Nageshwar Rao needed to find a pricing approach and level that would enable him to
point out the value of the product to the customer and to price the product accordingly.
He had the feeling that he was leaving money on the table. In particular, we wanted to
know the degree to which, if at all, he could raise prices in the wire drawing, textile
industry (guide pulleys), spindles and the turbine blade segment.