Balu Forge Industries Limited has entered into a significant Memorandum of Understanding for the supply of large caliber ammunition shells, marking a strategic expansion in the defence sector with substantial revenue implications. The 5-year agreement, dated February 26, 2026, involves supply from the company's greenfield manufacturing campus in Belgaum, Karnataka, and could potentially generate revenue equivalent to 100% of the company's yearly earnings, representing the next phase following its onboarding onto the NATO supply chain.

Agreement Overview and Strategic Positioning

The MoU aligns with Balu Forge's strategy to build a strong foundation in the defence consumable space, starting with large calibre ammunition and expanding towards medium and small calibre variants in the future. The agreement covers the complete large caliber ammunition category, beginning with 155mm M107, 152mm, and 155mm ERFB/BT variants, with plans to extend to 105mm, 120mm, and 81mm variants.

Product Specifications and Volume Commitments

The agreement encompasses substantial monthly supply commitments across two primary ammunition categories:

The combined monthly volume of 40,000 units exceeds the company's present capacity, though plans are in place to increase production capacity beyond 360,000 units per annum from internal accruals.

Pricing and Revenue Impact

Both ammunition variants are priced uniformly at USD 315 per unit on FOB Nhava Sheva terms. The pricing structure includes indexation to the London Metal Exchange to safeguard interests of both buyer and seller against metal price fluctuations. The agreement's revenue potential could represent 100% of the company's yearly revenue, highlighting its transformational impact on business operations.

Implementation Timeline and Confidentiality

The legally binding agreement commenced on February 25, 2026, with serial supply commencement scheduled from April 2026 in a phased ramp-up manner. Initial supplies will focus on 155mm M107 and 152mm variants, with extended range variants (155mm ERFB BB/BT) to be added as addendum following trials and approval.

The MoU has been signed with a NATO affiliated entity, with the end user's name remaining undisclosed due to the confidential and sensitive nature of defence supplies. This confidentiality aspect underscores the strategic importance of the agreement within the NATO supply chain framework.

Manufacturing Capabilities and Infrastructure

Balu Forge operates from a 46+ acre campus in Belgaum, Karnataka, featuring fully integrated forging and machining capabilities. The facility is equipped with high-capacity hydraulic hammers, forging presses, dedicated in-house tool room, metallurgical labs, and CNC machining units, ensuring consistent precision and quality for defence applications.

The company's comprehensive product portfolio ranges from 1 kg to 1,500 kg components up to 3 meters in length, supporting diverse applications across automotive, aerospace, defence, and other industrial sectors. This diversified manufacturing expertise positions the company well for defence sector expansion beyond ammunition shells.

Balu forge industries Ltd has announced a major breakthrough in its defense sector operations by securing a comprehensive five-year supply agreement for large caliber ammunition. This strategic contract represents a significant milestone for the company's expansion in the defense manufacturing segment.

Contract Specifications

The agreement encompasses the supply of specialized 155mm M107 ammunition units over the contract duration. The deal structure provides clear parameters for both volume and pricing, ensuring predictable revenue streams for the company.

Delivery Timeline and Volume Commitments

The contract establishes a structured delivery schedule with initial shipments set to begin in April 2026. The monthly supply commitment of 30,000 units demonstrates the substantial scale of this agreement and the client's confidence in Balu Forge Industries' manufacturing capabilities.

The pricing structure at $315 per unit reflects competitive positioning in the large caliber ammunition market. This fixed pricing arrangement provides revenue predictability throughout the contract term, supporting the company's financial planning and operational scaling requirements.

Strategic Implications

This five-year agreement positions Balu Forge Industries as a reliable supplier in the defense ammunition sector. The long-term nature of the contract provides operational stability and supports the company's growth trajectory in specialized defense manufacturing. The April 2026 start date allows adequate preparation time for production scaling and quality assurance processes.