Balu Forge Industries has signed a Memorandum of Understanding (M.O.U) for a period of 5 years to supply empty shells for large caliber ammunition. The agreement, effective February 25, 2026, is with a NATO affiliated entity. Quantities include 30,000 units/month of 155 mm M107 and 10,000 units/month of 152 mm, priced at USD 315 per unit. Production expansion will be funded via internal accruals.
Balu Forge Enters 5-Year Ammunition Supply Agreement
Balu Forge Industries Ltd announced the execution of a Memorandum of Understanding (M.O.U) regarding the supply of empty shells from its greenfield manufacturing campus located in Belgaum, Karnataka. This agreement marks the next significant step in the company’s strategy to establish a strong foundation in the defence consumable space, starting with large caliber ammunition.
Key Constituents of the MOU
Product and Volume Commitments
The agreement covers the complete large caliber ammunition category, with specified volumes under a ‘Ready to Fill’ condition for a duration of 5 years:
- 155 mm M107: 30,000 units per month.
- 152 mm: 10,000 units per month.
These initial volumes are noted to exceed the company’s present capacity, but management confirms a plan is in place to increase production capacity beyond 360,000 per annum, funded entirely from internal accruals.
Pricing and Payment Structure
The agreed pricing structure is fixed for the initial period:
- 155 mm M107: USD 315 per unit.
- 152 mm: USD 315 per unit.
The pricing will be indexed to the London Metal exchange to safeguard both parties against fluctuations. Payment terms stipulate a 20% advance, with the balance payable via an irrevocable Letter of Credit within 30 days of the invoice issuance. The terms are structured as FOB Nhava Sheva.
Agreement Tenure and Confidentiality
The agreement is legally binding for both parties and has a tenure of 5 years, commencing on February 25, 2026. Due to the sensitive nature of the supplies, the M.O.U was signed with a NATO affiliated entity, and the identity of the end user has not been disclosed.
Supply Commencement
The phased commencement of supplies is slated to begin in April 2026, initially focusing on the 155 mm M107 and 152 mm variants. Future extended range variants (155 mm ERFB BB/BT) will be added via an addendum following successful trials and approval.
About Balu Forge Industries
Balu Forge Industries is described as a leading Indian precision engineering company specializing in forged and machined components for sectors including automotive, defence, aerospace, and wind energy. The company operates advanced manufacturing facilities across a 46+ acre campus in Belgaum, Karnataka, focusing strategically on expanding defence production and enhancing automation.
Source: BSE
