"Bottling and dairy industries offer good prospects," says an official of TI Diamond Chain, part of the Chennai-based Murugappa group. "Nearly 15 per cent of the Rs 70,000-crore investment approvals has come from the liquor and soft drinks industry."

To tap the potential, chain majors like TI Diamond Chain (Rs 125-crore turnover), LG Balakrishnan and Bros (Rs 194 crore) and Hybro Chains are now rolling out non-corrosive stainless steel chains, hitherto imported.

Despite this positive note, manufacturers are singing the now familiar Chinese tune price-cutting. "We cant fight the Chinese government," says LGB managing director B Vijayakumar, referring to the unseen subsidies given to the manufacturing units located there.

Both LGB and TI Diamond Chain export large quantities to the replacement market in Europe, Southeast Asia and South Africa. TI Diamond Chain also sells small numbers to some overseas OEs. "But maintaining the current level of exports in the wake of Chinese aggression is very difficult," says Vijayakumar.

Not only in the export markets, even in India the Chinese motorcycle chains have wormed their way into some OEs. "I wont doubt the Chinese product quality; they are certainly six times cheaper than ours in the international market," says an industry official.

"Chinese chains have affected realisations in the standard chains market and we have taken measures to improve our product and plans to offer value-added differentiated products," says Murugappa group general manager (corporate communications) K Chandrasekaran.

The value-addition he refers to is to roll out chains with high fatigue having a longer life. On the other hand, LGB is looking at bow chains for industrial applications, apart from stainless steel chains for the food sector.

Broadly, the chains are classified into three categories automobile, industrial/engineering and specialised chains. Chains that are used in power, fertiliser and chemical industries fall under the industrial/engineering category and those that are used in the food processing and medical equipment industries fall under the specialised category.

The already-matured $2-billion global industry is growing at an annual rate of just 1.5 per cent. According to an industry official, the domestic industry-size could not be estimated due to a sizeable import and the presence of several small players.

But the good domestic demand has brought relief to domestic manufacturers. "We will maintain last years 11-per cent growth," says Vijayakumar. Apart from being a leading player in the domestic/exports business in the chain industry, LGB is also into textiles, bodybuilding, cogged belts and rubber products, engine servicing, tyre-retreads and trading activities. But it is the companys chain division that rakes in around Rs 150 crore.

The Rs 6.13-crore equity-based TI Diamond Chain is an 80:20 joint venture between the Murugappa group and the Diamond Chain Company, US. Having four plants three in Chennai and one in Hyderabad TI Diamond Chain has inked technology agreements with Tsubakimoto, Japan, for certain engineering-class chains and Borg Warner, US, to manufacture silent chains for automobiles.

At the market place it is a neck-to-neck race between LGBs Rollon brand and TI Diamond chains Rambo (auto-chain) and Diamond (industrial chain), with both claiming to be leaders in market shares. "We have a stronghold in the industrial and two-wheeler OE segment," says Vijayakumar.

Unlike LGB, TI Diamond Chain has a separate plant for rolling out agricultural chains. "Agriculture chains contribute 20 per cent of our export turnover while commanding dominant market shares in other segments," says Chandrasekaran.

While the market for automotive chains is thriving, the market players express conflicting views with respect to industrial and engineering segments. While TI Diamond Chain says the demand for the general engineering and manufacturing industry is registering a steady growth, Hybro-Chain director S A J Kamal Batcha does not share the same view.

Part of the Sri Lankan Hybro group, Hybro Chains primarily caters to the industrial sector. Says Batcha: "The market is very bad. While our selling prices were reduced by 10 to 15 per cent, there is no corresponding reduction on the raw material front. Besides, realisations are getting delayed."

In line with the market trend, Hybro Chains is planning to enter the automotive sector and also plans to manufacture sprocket kits. On its part LGB, after an elaborate VRS package, invested Rs 15 crore on systems to make it a cost-effective chain manufacturer. Now, Vijayakumar says, "the company does a 40-per cent more production with the reduced workforce."

Refusing to give more details, he says: "We are now converting ourselves into specialists in metal workings and have identified some more products to be integrated into our production schedule."