Balu Forge Industries Ltd has entered into a Memorandum of Understanding (MOU) for the supply of empty shells from its greenfield manufacturing campus in Belgaum, Karnataka. The development marks the next phase in the company’s expansion into the defence consumables segment following its onboarding onto the NATO supply chain and the commercialisation of its empty shell production line.
The agreement aligns with the company’s strategy to establish a presence in the large calibre ammunition category, with plans to gradually expand into medium and small calibre segments.
Under the terms of the MOU, the agreement covers the complete large calibre ammunition category, beginning with 155 mm M107, 152 mm, and 155 mm ERFB/BT variants. The scope is expected to extend further to include 105 mm, 120 mm and 81 mm categories.
As per the agreed product and quantity details, the company will supply 30,000 units per month of 155 mm M107 shells in “Ready to Fill” condition for a period of five years. In addition, 10,000 units per month of 152 mm shells in “Ready to Fill” condition will also be supplied over the same five-year period.
The contracted volumes currently exceed the company’s existing production capacity. However, plans are already in place to increase manufacturing capacity beyond 360,000 units per annum. The expansion is proposed to be funded through internal accruals.
In terms of pricing, both 155 mm M107 and 152 mm shells have been agreed at USD 315 per unit. The pricing structure will be indexed to the London Metal Exchange, forming the basis for adjustments in case of fluctuations, aimed at safeguarding the interests of both the buyer and the seller. The terms of the agreement are based on FOB Nhava Sheva.