India's Sakthi auto supplier to open Detroit facility, create 183 jobs

APRIL 26, 2012 AT 2:27 PM


BY MELISSA BURDEN THE DETROIT NEWS


An automotive supplier from India will open a manufacturing facility in Detroit that is expected to generate up to $18.6 million in private investment and create up to 183 jobs, according to an announcement Thursday from the Michigan Economic Development Corp.

The MEDC said the Michigan Strategic Fund will give a $1.5 million incentive to Sakthi Automotive Group to set up shop in Detroit. The company had been looking at a site in South Carolina, the MEDC said.

"Sakthi Automotive is a global leader in the automotive supply chain and this decision to locate its first North American facility in Detroit demonstrates Michigan's strong advantages as a great place to do business," MEDC President and CEO Michael Finney said in a statement.

Sakthi Automotive is a division of the Sakthi Group and is a supplier of auto components such as steering knuckles, control arms, brake drums, brake discs and calipers to automakers. The company plans to buy and upgrade an existing vacant building in Detroit, and Detroit has offered a 12-year tax abatement worth $903,000 for the project, according to the MEDC.

Investment on the project will begin this year and job creation will "ramp up beginning in 2013," according to a briefing memo from the MEDC.

(Source : http://www.detroitnews.com/article/20120426/AUTO01/204260458/1148/auto01/India-s-Sakthi-auto-supplier-open-Detroit-facility-create-183-jobs)

Adhunik Metaliks to sell auto components arm

K.S. BADRI NARYANAN



CHENNAI, APRIL 26: 

Adhunik Metaliks Ltd plans to sell its subsidiary Neepz V Forge (India) Ltd.

In a filing to the BSE, it said its board has decided to offload the company's entire investment in Neepz V Forge.

The subsidiary has forging and machining facilities at Aurangabad in Maharashtra to manufacture automotive products such as crank shafts, under brackets, steering knuckles, steering arms, tie rod arms, cam shafts, spindles and several other forgings. It supplies to Tata Motors Ltd, Ashok Leyland, Mahindra & Mahindra, John Deere, Escorts, Dana Spicer among others.

Neepaz also caters to the non-automotive sector. In this segment, Tractors Engineers Ltd and Greaves Cotton are among its major clients.

With the commissioning of a fully robotised 8,000 tonne press line at Neepaz plant, the installed production capacity has gone up to 56,000 tonne per annum. The expansion will help the company meet the entire demand of leading automobile players.

Adhunik Metaliks, however, did not disclose other details about the sale. The company's stock was quoting at Rs 44.55, up 2.65 per cent at noon on the BSE.

(Source : http://www.thehindubusinessline.com/companies/article3355831.ece)

Sluggish outlook hits SKF India’s stock

The firm said it was cautiously optimistic about growth opportunities in the medium to long term, even as the near-term outlook is challenging
Mark to Market | Vatsala Kamat


Shares of SKF India Ltd, an automotive and industrial component firm, have fallen by around 3.7% after its March quarter results were announced last week. Apart from the tepid performance, the management note did not allay investor concerns on the outlook for the future either. The firm said it was cautiously optimistic about growth opportunities in the medium to long term, even as the near-term outlook is challenging.

Understandably so, given that around half its revenue comes from the industrial segment, which has been sluggish for the past few quarters on account of the slowdown in economic activity. Sales to the automotive original equipment segment, which accounts for about one-third of SKF India’s revenue, were also subdued in spite of better-than-expected auto sales during the quarter. This was because most auto firms cleared up inventory. Net sales fell 7.3% from a year ago and by 2.3% against the preceding quarter to Rs. 587.1 crore.

SKF India, however, managed costs effectively to improve profitability. Although, operating profit for the quarter at Rs. 88.3 crore was around 4% lower than the year-ago period, operating margin improved by nearly 60 basis points to 15%. One basis point is 0.01 percentage point.
This came as a result of lower raw material costs as a percentage of sales. Employee costs fell on account of write-back of provisions made in the earlier quarters. According to analysts, lower other expenditure was due to non-payment of service fee to the Swedish parent, which is likely to be bundled in the current quarter. This may hit margins in the current quarter.

That said, SKF India is backed by its Swedish parent whose commitment to Indian operations has translated into aggressive capacity expansion. The firm’s capital expenditure will increase from around Rs. 85 crore in 2011 to Rs. 100 crore this year. Of course, this will not satiate investors until sales momentum is visible.

SKF India posted a meagre 8.2% growth in net profit to Rs. 66 crore. This was partly driven by higher other income and interest income earned during the quarter.

“One can expect revenue and a resultant earnings momentum from the industrial segment only after a couple of quarters, as the impact of softer interest rates would lead to an improvement in economic activity only with a lag,” said Umesh Karne, analyst at Brics Securities Ltd. The stock trades at fair valuations of around 16 times 2012 estimated earnings.

(Source : http://www.livemint.com/2012/04/24223607/Sluggish-outlook-hits-SKF-Indi.html)

Samvardhana Motherson Finance to raise Rs 1,665 cr through IPO

Tuesday, April 24, 2012, 18:28 Mumbai: 

Samvardhana Motherson Finance (SMFL), components supplier to automotive industry is raising Rs 1,665 crore through public issue, which includes a fresh issue of Rs 1,344 crore and an offer for sale of Rs 321 crore by Radha Rani Holdings Pte limited.

Samvardhana Motherson initial public offering will open for subscriptions on May 2 and close on May 4, 2012.

Samvardhana is an integrated design and manufacturing company providing full system solutions to diverse industries. The company presently supplies components to automotive original equipment manufacturers namely Volkswagen group, BMW, Daimler, Renault, Nissan, Ford India, Volvo Car Corporation, Maruti Suzuki, Tata Motors, Honda Siel Cars India, Toyota, Kirloskar Motor and Fiat India Automobiles.

The company intends to use issue proceeds of Rs 1,344 crore for funding pre-payment and repayment of debt facilities availed by company and its subsidiaries with Rs 338.5 crore; funding strategic investments with an outlay of Rs 627.5 crore and funding investments in rear-view vision systems business with cost of Rs 156 crore.

The entire proceeds from the offer for sale will be paid to the selling shareholder and the company will not receive any proceeds from offer for sale aggregating Rs 321 crore.

"Our business has ongoing capital requirement and we are currently adding new production facilities and expanding and upgrading existing production facilities in India and abroad," SMFL Chairman Vivek Chaand Sehgal told reporters here.

The company currently markets and distributes its products and services and have presence in 25 countries, with the construction of manufacturing facilities underway in India, Brazil, Mexico, Spain and Thailand, Sehgal said.

In the nine months period ended December 31, 2011, its 76.6 percent consolidated income was from customers located outside India.

The price band of the IPO will be decided by the company and the selling shareholder in consultation with the book running lead managers and the minimum bid lot size will be decided by the company in consultation with the Book Running Lead Managers.

The company may consider participation by anchor investors, where the anchor investors will bid during the anchor investors bidding period, i.E. One working day prior to the bid opening date.

The Book Running Lead Managers to the Issue are Standard Chartered Securities (India) Limited and J P Morgan India Private Limited.

PTI

(Source : http://zeenews.india.com/business/news/finance/samvardhana-motherson-finance-to-raise-rs-1-665-cr-through-ipo_46457.html)

Caparo Group looking to more than doubling profits in India

6 APR, 2012, 01.59PM IST, PTI 


NEW DELHI: UK-based 1.5 billion euro Caparo Group is looking to more than double its profits from Indian operations to Rs 500 crore by 2013, its Chairman and Founder Lord Swraj Paul said today.

The group, that has built a strong presence in auto components with 32 manufacturing plants in different parts of the country and also has interests in the energy sector, would be ramping up its production.

The Caparo Group, which was founded by Lord Paul in Britain with borrowed 5,000 pound in 1968, has profits of Rs 200 crore from the Indian operations.

Its worldwide operations are spread to Britain, other European countries and the US with the industrial products including steel pipes.

He said the improvement in bottom-line would come both from scaling up of production with higher cost-efficiency measures.

The Caparo group has "invested a lot of money in India and we are starting seeing returns," Lord Paul said.

"I always look at the profits not the turnover. I would like to see Rs 500 crore profit by 2013 (from Indian operations). Today, it is about Rs 200 crore. We will ramp up production and cut cost," he said.

Stressing that the group's focus would always be on the profitability, he narrated a famous quote, "Turnover is vanity, profit is sanity and cash is the king".

He said Caparo is one of the largest auto component makers in India and supplies about 30 per cent of the components of Tata Nano among others.

Auto parts makers in a bind over passing on excise hike

Probal Basak / Kolkata Apr 03, 2012, 00:44 IST

While automakers have gone ahead and increased prices to offset the hike in excise duties proposed in the budget, the auto component industry is in a bind over passing on the burden – especially in the aftermarket or replacement market – owing to intense competition from both unorganised players and imports.

“The increase in excise duty by two per cent on auto components has a two-way impact. Apart from the fact that the increase in excise duty adversely impacts vehicle prices, which will in turn adversely impact sales of vehicles and auto components, it is hugely affecting the aftermarket business of the auto parts industry,” Vinnie Mehta, executive director of Automotive Component Manufactures Association (Acma), said.


“In the aftermarket (service and repair) there is huge competition from the unorganised sector, which also suffers from counterfeiting. And the selling point in the counterfeit market is the price point. You are hugely under strain here. You cannot increase prices because of the competition from the unorganised sector and counterfeit products,” Mehta added.
This has compelled manufacturers to absorb this increase in costs, and pass on the hike only partially in certain segments.

This loss is likely to contribute to the industry’s depleting margins, because almost 25 per cent of auto component sales are in the aftermarket, which is more profitable for auto parts makers than the OEM (original equipment manufacturer) segment.

The industry also feels that any hike in product prices in the aftermarket will result in a loss of market share to counterfeiters.

“Close to 40 per cent of the after market is dominated by unorganised sector and counterfeit products. Any increase in prices will be favourable to counterfeiters,” Mehta said.

Moreover, according to Acma, “spurious imports from China” have made the position of organised local players weaker in the aftermarket. Between 2005 and 2010, the share of Chinese imports increased from five per cent to 11.5 per cent.

Auto parts maker Q H Talbros said any price hike would impact market sentiment in the aftermarket, which is dominated by high-volume products.

“In respect of supplies to OEMs, there is no direct impact, because the hike in excise duty is a pass-through item. But we are not able to pass on the burden in the repair market, especially in the low-technology, high-volume segment, which constitutes 70 per cent of the market,” said Munish Malhotra, chief general manager (sales and marketing) of QH Talbros.

He explained that all players are making such parts and there are many spurious products, and that organised players cannot afford to hike prices in all these segments because of the stiff competition. Talbros is involved in the manufacture of auto parts like gaskets, steering and rubber components.

(Source : http://www.business-standard.com/india/news/auto-parts-makers-inbind-over-passingexcise-hike/469825/)

Haridwar factories brew Manesar-like labour situation

Akshat Kaushal / Haridwar Apr 04, 2012, 00:15 IST


Workers at Satyam Auto and Rockman Industries, two leading auto parts suppliers to India’s largest two-wheeler company, Hero MotoCorp, have been on strike for the past two weeks. They have come together to press for better wages and a workers’ union.

A two-week strike is unusual, but the managements of both companies have refused to agree to the workers’ demands. Unlike previous strikes here, this industrial action shows signs of disturbing the peace in the region, with support pouring in from workers at other companies. The region, which saw accelerated investments last decade, boasts of leading companies such as fast moving consumer goods company Hindustan Unilever, luggage manufacturer VIP, battery manufacturer Eveready, and Hero MotoCorp. Around 850 companies here employ over 70,000 people.


So, as workers from the two strike-hit companies staged a protest here on Tuesday, outside the offices of the district administration, they were supported by workers from companies such as VIP, Eveready ITC and Bharat Heavy Electricals Ltd (BHEL). A similar march was taken out last Wednesday, too. Major trade unions such as the All India Trade Union Congress and Hind Mazdoor Sabha have supported the protesting workers. So are 13 workers’ unions at the public sector engineering major, BHEL. Workers at Eveready and VIP have presented their respective companies with charters of demands, including wage hike.

Year	Number of disputes	Man-days lost
2005	3	34,415
2006	9	13,015
2007	13	24,254
2008	2	12,316
Source: Labour bureau

“If there is a need, we’ll stop work in our factory,” says Ashwani Kumar, president of the unrecognised workers’ union at ITC. Most workers here say they are inspired by the success of the ITC strike in 2010. In October 2010, workers at ITC’s manufacturing facility here went on strike over similar demands, wage increase and a workers’ union. The three-day strike ended after the company agreed to give all workers an 8.3 per cent bonus and Rs 1,000 advance for festival season. ITC later increased salaries of all workers.

LABOUR FLASHPOINT

* Over 1,200 workers from auto-component manufacturers Satyam Auto and Rockman Industries, both leading suppliers to the world’s no. 1 two-wheeler maker, Hero MotoCorp, have called a strike. The strike is in its second week now

* Workers demand an increase in wages and formation of a workers’ union

* Workers from other companies in the neighbourhood have supported the strike

* The region, which has seen accelerated investments in the last decade, has factories by FMCG major Hindustan Unilever, luggage-manufacturer VIP, battery-manufacturer Eveready and Hero MotoCorp. About 850 companies here employ over 70,000 workers

* In 2010, a similar strike by workers in ITC ended with the company agreeing to increase wages and provide bonus. This proved a shot in the arm for all workers in the area

The protesting workers at Satyam Auto and Rockman complain they are paid the minimum wage, whereas other companies pay higher salaries for the same work. They also allege they are paid less than other workers working at other facilities of the company. Apart from this plant, Satyam has manufacturing facilities in Gurgaon and Manesar. Rockman has plants in Ludhiana, Gurgaon and New Delhi, besides Haridwar.

“We are paid Rs 6,500 for a month’s work, whereas for a similar work in any other factory, workers are paid much better,” says Jitendra Singh, 27, a welder at Satyam Auto.

Unlike the trend last year, when workers from over a dozen companies across the country went on strike over issues relating to contract labour, it’s the permanent labourers who are protesting this time. A part of the reason is the law that mandates against hiring of more than 50 per cent contract labour. Like in the past, contract labourers are not participating in this strike.

Most companies in the region agree workers’ salaries are lower than industry standards in other regions. But they ask why should they pay more than what the state government has fixed as the minimum wage, arguing the industry in the region is still recovering its investment.

With Rs 228 being the minimum wage for a skilled worker employed in an establishment, the state has the highest minimum wage in the country. Haryana has fixed the minimum wage for a highly skilled worker employed in the manufacturing industry at Rs 198, while Gujarat has fixed it between Rs 167 and Rs 171.

“It’s unfair to compare wages in Manesar and here,” says R N Gour, deputy general manager, human resources, Satyam Auto. “The company is paying as per the minimum wages set by the state government. If the state government increases the minimum wage, we, too, will increase the wages,” says Gour. Rockman didn’t respond to an email sent to the company.

Data on industrial disputes do not bear out the impression that industrial relations have deteriorated. Data from the Labour Bureau suggests the state saw three labour disputes in 2005, leading to loss of 34,415 man-days; nine in 2006, 13 in 2007 and two in 2008. Data for preceding years is not available. However, the state administration agrees relations between employers and employees are not cordial.

“Workers here are seeing others are paying better wages, so they are protesting for similar increase. Over the last couple of years, disputes have increased near Diwali and in March-April, because of wage increase,” said Vipin Kumar, assistant labour commissioner of Haridwar, who is negotiating between the managements and protesting workers.

(Source : http://www.business-standard.com/india/news/haridwar-factories-brew-manesar-like-labour-situation/470065/)

Valeo, Anand group tie up for auto parts aftermarket biz

CHENNAI, APRIL 3:

Auto-component company Valeo has forged a joint venture with Anand Group for aftermarket business.

Valeo Service India Auto Parts will distribute automotive products produced by the manufacturing companies of the two groups in the independent aftermarket across India, under the Valeo brand name. The joint venture company will be based in Chennai.Valeo has been as an automotive supplier in India since 1997. It has over 2,000 employees across five production sites in Chennai and Pune and an R&D facility in Chennai.

With the joint venture, Valeo is targeting the “fast-growing” automotive independent aftermarket business in India, said a press release.

Valeo manufactures clutches, friction materials, lighting systems, security systems, starters and alternators. The Anand group makes automotive systems and components.

(Source : http://www.thehindubusinessline.com/companies/article3277185.ece?homepage=true&ref=wl_home)

IAC Group Names James K. Kamsickas Global Chief Executive Officer

International Automotive Components (IAC) Group has appointed James K. Kamsickas as Chief Executive Officer (CEO), effective April 15, 2012. Kamsickas previously served as global co-chief executive officer and president of North America and Asia.

Pune, Maharashtra, April 1, 2012 /India PRwire/ 



International Automotive Components (IAC) Group has appointed James K. Kamsickas as Chief Executive Officer (CEO), effective April 15, 2012. Kamsickas previously served as global co-chief executive officer and president of North America and Asia.

Jens R. Höhnel, who served as global co-chief executive officer and president of Europe, is retiring after more than 40 years in the automotive and vehicle interiors supplier industry. Höhnel will continue with the organization in a special advisory role until April 2013 to ensure a smooth transition.

"We are grateful to Jens for his efforts during the formative period of IAC. The foundation he created and Jim's prior role as global co-CEO assure a flawless transition of leadership," said IAC Group Chairman Wilbur L. Ross, Jr. "Jim has 23 years of automotive and interiors experience, and extensive international business expertise. With Jim's leadership skills and global experience, he is the ideal choice to lead IAC Group's global business moving forward."

Kamsickas and Höhnel have successfully helped to establish and secure IAC Group's position as a leading tier-one supplier. With significant international automotive business expertise, their leadership and alignment of the company's regional operations allowed IAC Group to thrive and transform into the global vehicle interiors leader that it is today.

In addition to executing numerous major acquisitions and integrations of distressed companies related to the founding and growth of IAC Group's global operations, Kamsickas effectively guided IAC Group through the 2008-2009 economic crisis in North America. During this time, IAC Group played a key role in consolidating the North American automotive interior supply space. Also, he initiated the company's expansion in Asia, creating regional headquarters, technical centers and new manufacturing facilities in three of the continent's largest countries.

Previously the head of Lear Corporation's Interior Systems Division, which became IAC Group North American and Asian operations in 2007, Kamsickas held a number of leadership roles within the organization, including as a vice president in its GM, Ford and Chrysler customer divisions and vice president of operations of Lear's Seating, Electrical and Interiors divisions. Also, he served in several key positions in the development of Lear's European operations, including international assignments in Germany, Sweden and Austria.

Since the creation of IAC Group Europe in 2006, Höhnel was instrumental in the company's formation, including the successful integration of multiple strategic acquisitions in Europe and subsequent success through the 2010 consolidation of the company's regional operations into one global organization. Höhnel will continue to serve as a member of the company's Board of Directors. In that role, he will lend his extensive experience and market knowledge to the future success of IAC Group.

"Jens has been effective in running our European operations and helping us grow our global footprint," said Ross. "We appreciate that he will support a transition that will effectively allow us to remain focused on our current business plan and provide exceptional customer satisfaction. We thank Jens for the important role he has played in shaping IAC in its formative years and wish him well in his retirement."

(Source : http://www.indiaprwire.com/pressrelease/auto/20120401116218.htm)

Johnson Controls Enters JV To Explore Indian Motorcycle Segment

Trefis Team, Contributor

Johnson Controls has entered into a joint venture with Pricol Limited, a supplier of automotive instrument clusters in India. This venture will be called Johnson Controls Pricol Private Limited, and it will manufacture components for car and motorcycle manufacturers in India. [1] The venture will operate out of Pricol’s manufacturing plant in Pune.

Johnson Controls principally competes with other automotive battery manufacturers like Exide Industries and Magna International. We currently have a Trefis price estimate of $38 for Johnson Control’s Stock, around 20% above the current market price.


See our full analysis of the Johnson Controls stock here

While Johnson Control will bring its global footprint, including its purchasing relationships and existing customer base to the joint venture, Pricol will leverage its manufacturing capabilities to build the business.

The joint venture seeks to differentiate itself in the market by creating a unique value proposition for customers. Pricol hopes to bolster its market-leading position with this move while Johnson Controls will get access to the motorcycle market through Pricol’s existing customer base in the segment. Johnson Controls also plans to make the Pune manufacturing site of this JV its global center for excellence.

India is one of the more important geographies for Johnson Controls. The automotive industry is expected to be one of the main beneficiaries of India’s booming middle class and urbanization. The company will look to capitalize on this trend and increase its global market share in automotive batteries and interiors. This JV will help it procure local support to enter the motorcycle segment of the Indian automotive market. Automotive interiors is among the more important divisions of Johnson Controls, accounting for more than 25% of the stock’s value according to our estimates.

(Source : http://www.forbes.com/sites/greatspeculations/2012/03/30/johnson-controls-enters-jv-to-explore-indian-motorcycle-segment/)

TVS Group buys UK auto parts distribution firm

Vidya Padmanabhan, vidya.p@livemint.com

TVS Group, the Chennai-based automotive conglomerate, has acquired a 90% stake in Universal Components UK Ltd, a wholesale distributor of commercial vehicle parts, for Rs.100 crore.

The acquisition is its second in the UK after group company TVS Logistics Services Ltd bought logistics firm Multipart Holdings Ltd in 2009.

“This acquisition will give increased scale and size to strengthen our relationship further with global suppliers,” said R. Dinesh, managing director of TVS Logistics Services.

“We will utilize Universal Components’ marketing expertise and best practices in our businesses in India and other Asian markets.”

TVS Group has made the purchase using internal accruals from two group companies, tyre-maker TVS Srichakra Ltd and Associated Auto Parts Pvt. Ltd, which have together set up a special purpose vehicle, TVS Europe Distribution Ltd, for the acquisition.

TVS Europe Distribution would consider further acquisitions in Europe in the coming years, said Richard Slee, chief executive of TVS Automotive Europe Ltd.

With the acquisition, the TVS Group’s turnover would cross Rs.1,000 crore in the UK.

Universal Components would help TVS improve its forecast and planning capabilities and deploy advanced computer systems in India and other markets such as Sri Lanka and Bangladesh where it distributes spare parts, Dinesh said.

The TVS Group has an annual revenue of $6.6 billion (around Rs.33,600 crore today), with its parts distribution business contributing $1.6 billion. Universal, with annual revenue of £20 million (around Rs.162.5 crore), employs around 100 people.

“This (acquisition) seems to fit in,” said Kumar Kandaswami, senior director and country leader for manufacturing at consultancy Deloitte Touche Tohmatsu India Pvt. Ltd. “The TVS Group has companies that have component manufacturing capabilities. This would help it expand its distribution channels.”

TVS Supply Chain Solutions, the group’s European logistics company, for its part, would be eyeing acquisitions in Scandinavia and Poland, and expand its presence in Spain and Germany, Slee said. An acquisition would likely be made in Turkey in the next 12 months, he said.

(Source: http://www.livemint.com/2012/03/27223508/TVS-Group-buys-UK-auto-parts-d.html?atype=tp)

Ghaziabad’s auto ancillaries face labour shortage

Shivendra Kumar Singh, ET Bureau Mar 8, 2012, 11.35AM IST


GHAZIABAD: Ghaziabad, home to over hundred auto ancillary units, worth approximately Rs 600 crore is going through an acute manpower shortage despite rise in demand from the sector. While many players are contemplating automation of their units, government apathy and indifference from the banking sector have added to their woes. "We are under a lot of pressure to meet the demands of spare parts from our customers.

The sector is in the pink of its health, but not for us here in Ghaziabad," said Nand Lal Sharma, vice-president of the Kavi Nagar Industrial Area and director of Janus Auto. The two and half decade old company, Janus Auto, has been supplying spare parts to various transport departments of states like Gujarat, Himachal Pradesh, Andhra Pradesh, Tamil Nadu and the national capital Delhi.

(Source : http://articles.economictimes.indiatimes.com/2012-03-08/news/31135801_1_spare-parts-ancillaries-banking-sector)

Varroc leads Charge of the Indian Component Brigade Read more: http://forbesindia.com/blog/business-strategy/varroc-leads-charge-of-the-indian-component-brigade/#ixzz1q1kpIvee

03/13/2012 | 1 comments | 273 views


Varroc, an automobile components company based out of Aurangabad has announced that it will buy out the lights business of Visteon Corporation, a $ 8 billion US based auto components company. Varroc says it has paid about $92 million for the acquisition. It will now become India’s largest automotive lighting manufacturer. It could, in fact, rank among the top three automotive component manufacturers in India.

It is possible that you might not have heard of Varroc before. You should now- for various reasons.  Here is a homegrown automotive components manufacturer with its sights on the global stage. Tarang Jain, the company’s managing director doesn’t lack for ambition- he aims to grow Varroc to a $ 4 billion company by 2020. The new path not be through licences or technology agreements with multinationals like many of its peers. Vineet Sahni, president of Varroc’s electrical division and only six months old in the company (he was earlier at Minda) says that he has seen enough ‘begging for technology in the auto components space’. Varroc plans to have its own resources and technology. The downturn has thrown up quite a few opportunities, and there are good assets on sale, he says.

So what is Varroc’s background? It was founded by Naresh Chandra Jain, an entrepreneur who has for long been suplier to Bajaj Auto. Tarang is the son of Naresh Jain and Suman Bajaj-Jain, who is Rahul Bajaj’s sister. In the last 20 years Varroc has grown to become a Rs. 3, 200 crore company. It is still a private company though where two wheelers account for almost 80 percent of its business. Varroc has three business verticals; polymers (rear view mirrors, body panels and stuff), electrical (headlights, instrument clusters) and metallic (forging, catalytic converters, crankshafts etc). Each business accounts for roughly a third of its turnover.
Varroc figures as a prominent supplier to the two and three wheelers industry in the plastics and electrical space. It supplies to Bajaj Auto, Yamaha and Royal Enfield. But it has been sometime now that Tarang has been looking at opportunities to break into the big league. The lighting business, could well be his chance to do this.
In  December last year, Varroc bought a majority stake (80 percent) in Italy’s lights manufacturing company Triom. The Itallian company has a market share of almost 60 percent in Europe and supplies to Yamaha, Ducati and Honda. And it has plants in Italy,Romania and Vietnam. But even when this deal was taking shape, back in October 2011, Varroc began closely looking at Visteon’s lights business which was up for sale. Visteon manufactures lights for the passenger vehicles market.
Varroc didn’t have any presence in the car lights business. Visteon had the technology and the low cost manufacturing base. Tarang says the acquisition comes with an engineering center with 400 engineers and manufacturing base in Czech Republic, Mexico, India and a joint venture in China. And Visteon’s major customers are Ford, General Motors, Volkswagen and Jaguar Land Rover. Visteon’s lights business recorded revenue of $ 531 in the year 2011. Varroc decided it was a good buy.
The question though is if that be so, why did Visteon want to sell? In the last few years the company has been downsizing and getting rid of what it calls non core businesses. It has been in chapter 11 protection for two years. Visteon posted a loss of $ 26 million in Q4 earnings declared last month. So it doesn’t come as a surprise that it decided its lights biz is non core. Tarang quotes the example of another component maker- Delphi which at one point had revenues of more than $ 30 billion. “But it never made money,” he says. Over the last few years Delphi has gone the same way trimming down its businesses to bare essentials.
It is interesting how this acquisition will change Varroc’s profile. Cars rarely get developed for a single market anymore. With the Visteon buy, Varroc gets the scale and size of a global supplier. It will also have to scale up to deal with the complexity of running a global business. The total employee count is about 9, 000- spread across several geographies. Execution will be key to the success of the venture. Tarang will need  to grow Visteon’s existing business deeper into the US, European and India markets. He has to grow Varroc’s two-wheeler business in the far eastern countries. That’s a lot of hard work.


(Source : http://forbesindia.com/blog/business-strategy/varroc-leads-charge-of-the-indian-component-brigade/#ixzz1q1lO8bRy)

Rajkot components industry woos auto majors

Vimukt Dave / Mumbai/ Rajkot Mar 16, 2012, 00:53 IST



The Rajkot based auto components industry seems to have attracted major auto companies including Tata Motors, Asia Motor Works (AMW) and Peugeot once again.

At a buyer-seller meet held on Thursday in Rajkot, major auto companies evinced interest to work with auto components manufacturers from Rajkot. Organised by The Confederation of Indian Industry (CII), in association with Rajkot Engineering Association (REA), the meet saw participation from more than 90 companies.


"Peugeot is in the process of setting up a manufacturing unit in Gujarat and for our components requirement we will come to Rajkot. Safety and quality is priority for us and if any component manufacturer matches our requirement, we will be happy to do business with them," said Purvish Shukla, India vehicle project purchasing manager, PSA Peugeot Citroen.
Even Asia MotorWorks (AMW), which currently importing its cabin from China, is looking for increased localisation. "We have three vendors in Rajkot and as we are focusing on localisation, Rajkot seems to be the best option for us as it is nearest place from our factory," said Nagesh Azad, senior general manager - materials, AMW.

Similarly, Tata Motors also evinced interest for the region even as its officials met vendors in the CII buyer-seller meet. "We have two direct suppliers from the city and we are looking the vendors that have new technology and who can match our measurements. Further, Rajkot definitely has good potential to grow more. However, the city needs to concentrate more on quality," said Prashant Saxena, senior general manager, vendor development and procurement, Tata Motors Limited. Already, Rajkot based Bhavani Industries and Amul Industries are supplying parts to Tata for Nano. Meanwhile, according to VM Jha, deputy director, MSME development board of India, the meet will also motivate the small and medium enterprises (SMEs) to produce value added products. "There are so many small manufacturers in auto components industry at Rajkot and they are growing by 15-20 percent every year," said Jha. There are 500 auto component manufacturers at Rajkot. Out of these around 50 are suppliers to original equipment manufacturers (OEMs) while the remaining are small players which supply to the retail market. The industry in Rajkot produces more than 300 types of parts for the automobile industry and employs about 10,000 people. Turnover of the industry is around Rs 800-1000 crore per annum.

(Source : http://www.business-standard.com/india/news/rajkot-components-industry-woos-auto-majors/467850/)

Budget 2012: Focus on MSMEs welcome, says ACMA

16 MAR, 2012, 10.08PM IST, AGENCIES 



NEW DELHI: The Automotive Component Manufacturers Association of India (ACMA) on Friday welcomed the Union Budget 2012-13 and its focus on the manufacturing and MSME sectors.

"ACMA welcomes the focus on manufacturing, especially the Micro, Small and Medium enterprises (MSMEs). MSMEs constitute over 70% of ACMA's membership and access to capital has been one of the major constraints for the sector. We hope that setting up of the Rs. 5,000 crore 'India Opportunity Venture Fund' will enable the sector access the much-needed capital," it said in a statement.

It also said that it was happy about the weighted deduction of 200% on expenditure on R&D being extended for another 5 years, which will motivate the industry to focus on innovations and new product development.

"Shortage of skilled manpower has been an issue of significant concern to the industry; the introduction of weighted deduction of 150% on expenditure on skill development of employees will help in mitigating the concern," it said.

(Source : http://economictimes.indiatimes.com/news/emerging-businesses/sme-sector/budget-2012-focus-on-msmes-welcome-says-acma/articleshow/12296750.cms)

Duty hike will add further burden to auto component cos:ACMA

Monday, March 19, 2012


NEW DELHI: The Indian auto component makers have expressed their displeasure over the government's decision to raise excise duty, saying the step will adversely impact the already struggling automobile sector.

The industry also said the increase in customs duty of flat rolled steel, which is a key raw material, will affect the manufacturers.

"Enhancement of excise duty would adversely impact the prices of vehicles and in turn their consumption. This is of concern to the auto component sector as the sector grows in tandem with the vehicle industry," Automotive Component Manufacturers Association of India (ACMA) Executive Director Vinnie Mehta said.

The automobile industry is already struggling with sluggish demand during the current financial year due to rising fuel prices, inflation and high interest rates. From the beginning of this year, sales started improving slightly.

"Further, increase in customs duty on the 'flat-rolled' steel from 5 per cent to 7.5 per cent could unfavourably impact the auto component sector as this is one of the key input materials for the industry," Mehta said.

Flat rolled steel is used in sheet metal works that goes into many parts of a vehicle like body panels and chassis.

Expressing similar sentiments, steering major Sona Koyo said any price hike will surely impact the market sentiments.

"Of course the price hike will impact. However, if the interest rates come down, people may still be able to afford EMIs for purchasing vehicles," Sona Koyo Chairman Surinder Kapur told PTI.

Another component maker, Motherson Sumi Systems' Chief Financial Officer G N Gauba said the company will pass on the additional burden to the vehicle makers.

ACMA's Mehta, however, said the thrust given to the small manufacturing sectors in the Budget is a positive move.

"We welcome the focus on manufacturing, especially the micro, small and medium enterprises. MSMEs constitute over 70 per cent of ACMA's membership and access to capital has been one of the major constraints for the sector," he added.

He further said the setting up of the Rs 5,000 crore 'India Opportunity Venture Fund' will enable the sector access the much-needed capital.

"We are also glad that the weighted deduction of 200 per cent on expenditure on R&D has been extended for another five years, which will motivate the industry to focus on innovations and new product development," Mehta said.

Apollo Tyres' Chairman Onkar S Kanwar said the Budget struck a balance between economic growth and fiscal deficit, and hence should be able to build a positive sentiment.

(Source : http://economictimes.indiatimes.com//articleshow/12304906.cms)

Budget 2012: Auto components will not worsen further

Budget Highlights

• Increased excise duty by 2 per cent on auto components

• Retained the custom duty rates on auto components

• Basic customs duty on non-alloy HR and CR coils hiked from 5 per cent to 7.5 per cent. HR. This can lead to more pricing power for steel, and increase in steel cost of the auto sector

• To Set up Rs 5,000 crore India Opportunities Venture Fund with SIDBI

• Policy requiring Ministries and CPSEs to make a minimum of 20 per cent of their annual purchases from Medium & Small Enterprises (MSEs) approved. Of this, 4 per cent earmarked for procurement from MSEs owned by SC/ST entrepreneurs

• Increase in excise duty by 2 per cent on two wheelers, three wheelers, cars and commercial vehicles

• Excise duty reduced from 10 per cent to 6 per cent on specified parts of hybrid vehicles

• Extended weighted deduction of 200 per cent for R&D expenditure in an inhouse facility for a further period of 5 years beyond March 31, 2012

• Proposal to provide weighted deduction at 150 per cent of expenditure incurred on skill development in manufacturing sector

• No change in the corporate income tax rates

Budget Expectations Not Met

• Eliminate customs duty on alloy steel and secondary aluminum alloy

• Reduce customs duty on SS wirecloth stripe from 10 per cent to 5 per cent and on washcoat from 7.5 per cent to 5 per cent used for manufacture of catalytic converters and their parts

• To allow input credit on diesel procured for internal power generation & industrial use by manufacturing unit

• To provide 100 per cent Cenvat Credit on capital goods in year of purchase. Currently 50 per cent Cenvat Credit is allowed on capital goods in year of purchase, balance 50 per cent to be availed in subsequent years

• No interest for differential excise duty paid due to price increase subsequent to sale of goods in case supplies made to OEM's

• Phase out central sales tax by either removing it or reducing it from 2 per cent to 1 per cent pending GST

• Reduce corporate tax rate for domestic companies from current 32.445 per cent (including surcharge of 5 per cent and education cess 3 per cent) to 30 per cent

• Increase depreciation rate on capital goods from current 15 per cent to 25 per cent to encourage investments. It has also recommended charging a higher depreciation rate for domestically manufactured capital goods

• To extend weighted deduction for in house R&D that expires on 31st March 2012

• To provide 100 per cent tax benefit on corporate social responsibility activities

Budget Impact

The impact of hike in excise duty on auto components, depends on which segment a player caters to. In respect of supplies to OEM, there is no direct impact, as hike in excise duty is a pass through item.  The indirect impact can happen through easing of demand for auto, which can in turn affect demand for auto component. Given the relatively marginal impact of the hike on vehicle prices, this impact is marginal.

In respect of supplies to after sales/replacement market, there will be a pressure on margins.

The players have to hike prices to offset the hike in service tax and excise duties.  But in certain segments this may not be possible to due to intense competition from unorganised players and imports.  In such cases, the players have to partially absorb the increase in costs, and can only pass on a part of the hike.

In respect of auto component exports, we expect the Ministry of Commerce and Industry to hike duty draw back rates in June 2012, factoring in higher service tax and excise duty.  In the process, the margins for exporters can actually improve, depending on the extent of hike in duty draw back rates.

Within auto component manufacturers, players catering to commercial vehicles may be in comparative better position owing to large allocation to infrastructure industry - the prime customer for CVs.

Nonetheless, government's focus on MSEs augurs well for the auto component industry as 70 per cent of the companies in industry are MSEs. Also extension of 200 per cent weighted deduction on in-house R&D will continue to encourage companies to work towards innovative auto parts- a need for the industry especially to be recognized globally. Further introduction of weighed deduction on expenditure incurred on skill development would benefit all the auto parts players as skill training is basic pre-requisite for these companies in manufacturing field.

Outlook

The hike in customs duty on HR/CR coils may lead to marginal increase in domestic prices.  As regards hike in excise duties, it will be neutral for supplies to OEM, negative for supplies to replacement market, and turn positive for auto component exports.

The good news is the retention of the customs duty on auto parts at the existing levels. The countervailing duty equivalent to domestic excise duty is now 12 per cent from 10 per cent earlier. The auto component industry is already facing issues with growing imports as 21 per cent of domestic demand is met through imports. Though this step may not lower the imports, it at least wouldn't worsen the situation.

(Source : http://www.rediff.com/business/report/budget-2012-sector-auto-components-will-not-worsen-further/20120319.htm)

Auto component industry fears prices may go up on steel customs duty hike

Friday, 23 Mar 2012


BL reported that Indian auto component industry fears pricing pressure with the customs duty increase on flat rolled steel. The Budget has proposed a customs duty increase on non alloy, flat rolled steel from 5% to 7%. This, the ancillary industry feels, will effectively push up landed costs and create a benchmark for domestic steel manufacturers to hike prices.

Mr Vidyashankar Krishnan MD of MM Forgings said that “Domestic steel makers are talking of increasing prices to keep up with market forces. Some have already increased prices. This will directly impact the auto component manufacturers who have no choice but to pass on the price increase to customers. This will, of course, depend on the nature of contract and relationship with the customer.”

Mr Srivats Ram past president of the Automotive Component Manufacturers Association and MD of Wheels India said that “Steel is a primary product for the auto component industry and component makers importing steel will incur huge costs. With the rupee depreciation already acting as an automatic protection for the domestic steel industry and demand and growth for steel at the moment low, there was no reason for the customs duty to be raised.”

Completing the double whammy effect is the two per cent rise in excise duty from 10% to 12%. Mr Ram said that “At a time when inflation is at its peak, this hike will harm the auto and auto parts industry marginally.”

Source – http://www.steelguru.com/indian_news/Auto_component_industry_fears_prices_may_go_up_on_steel_customs_duty_hike/255742.html)

Varroc to acquire US-based Visteon Lighting for $75-100 mn

12 MAR, 2012, 08.20PM IST, PTI 


MUMBAI: Aurangabad-based privately-owned Varroc Group today announced signing of a deal with US-based Visteon Corporation to acquire the latter's global lighting business for USD 75-100 million (about Rs 500 crore).

"We have signed a deal with Visteon Corporation, a global automotive components maker, to acquire its global lighting business for USD 75-100 million. The deal will include acquisition of six manufacturing operations employing over 4,000 people which includes an engineering centre with over 400 engineers located in low cost countries like Mexico and Czech Republic," Varroc Group's majority shareholder and Chief Executive Tarang Jain told PTI here.

The company is expected to raise funds required for acquisition through private equity, Jain said.

The two companies expect to complete the deal in the third quarter 2012.

With this acquisition Varroc Group will become the largest Indian automotive lighting manufacturer and it will be amongst the top three component manufacturers in the automotive industry in the country, the company claimed.

Varroc Group provides components for two-three and four-wheel passenger and commercial vehicles and has 26 plants, of which 20 are in India, five in Europe and two in Southeast Asia employing around 5,000 people.

The acquisition is a major step in our vision of achieving USD 4 billion revenues by 2020 against USD 613 million in FY 12. Our annual revenues will be close to Rs 6,000 crore with this acquisition, Jain said.

The acquisition will also help Varroc to enter into global automotive exterior market for 4 wheelers. The company presently has strong presence in two wheeler lighting business, Verroc's president of electric division Vineet Sahni said.

(Source : http://economictimes.indiatimes.com/news/news-by-industry/cons-products/electronics/varroc-to-acquire-us-based-visteon-lighting-for-75-100-mn/articleshow/12235401.cms)

Automobile components industry to see stable growth

By G Balachandar Mar 01 2012 , Chennai


Despite changing growth patterns in the vehicle sector, auto parts industry is forecast to register a decent growth of 8-10 per cent in the domestic market for the present financial year.

“The fourth quarter is likely to be decent, as in some segments especially commercial vehicles the fourth quarter is always the strongest quarter. There is some growth in the passenger car segment in the fourth quarter especially given the poor showing in the third quarter. However, the agricultural tractor segment is showing some signs of slowing down in the fourth quarter,” Srivats Ram, managing director of Wheels India and former president of Automotive Component Manufacturers Association of India (ACMA) told Financial Chronicle.

In the recent past, the passenger vehicles was under some pressure, while light commercial vehicles including small commercial vehicles, tractors and two-wheelers did well and recorded good growth.

“The performance of the vehicle industry comes to the auto component industry as a 'mixed-bag'. We expect the overall growth for the auto component industry to be in the range of 8-10 per cent in the present financial year,” Vinnie Mehta, executive director, ACMA said.

“The medium & heavy commercial vehicle (M&HCV) segment recorded a volume growth (Y-o-Y) of six per cent each in Q1FY12, and Q2FY12 and 11 per cent in Q3FY12. While it may appear that the growth in the M&HCV segment picked up well in Q3FY12, it must also be noted that the corresponding period last year ie, Q3FY11 was relatively weak given the pre-buying that had happened in Q2FY11 in view of the scheduled change in emission norms from October 2010. Thus, volume growth of the M&HCV segment is unlikely to be in double digits in Q4FY12 (the growth was five per cent in January 2012). LCV segment will continue to post strong double digit growth,” said Subrata Ray, senior vice president – corporate ratings, Icra said.

Volumes in the passenger vehicle segment are to gain traction from Q4FY12 onwards as most of the concerns related to supply constraints (Maruti Suzuki labour unrest, Thailand floods) are now behind the industry. While the high base of Q4FY11 and the continued consumer scepticism on demand front, may still restrict growth in Q4FY12 and it is less likely to be as strong as it was in FY10 and FY11. However, performance in Q4FY12 will be better than the preceding quarters of this financial year, Ray added. Two wheeler industry is to report a volume growth of 14-15 per cent.

(Source : http://www.mydigitalfc.com/news/automobile-components-industry-see-stable-growth-965)

Rico Auto To Sell Continental Rico JV Stake To Partner

Rico Auto Industries is selling it's 50% stake in Continental Rico Hydraulic Brakes India Private Limited to it's JV partner Continental Automotive Holding Netherlands BV, a Continental Group Company. The stake sale is subject to approval of Reserve Bank of India.

Rico and Continental had entered into a JV in 2007 to build a hydraulic brake systems plant in India in a two step approach. Rico Hydraulic Brakes produces calipers for front and rear axles, drum brakes, master cylinders, brake boosters and load sensing proportioning valves for vehicles of all classes.

Rico Industries, along with it's subsidiaries and JVs manufactures and supplies auto components to auto OEMs across the country. It's clients include Hero MotoCorp Limited, Honda Motorcycle and Scooter India Private Limited, Maruti Suzuki India Limited and TataCummins Limited.


Rico Auto on BSE

Last year in December, it sold it's entire stake in JV - KRP Auto Industries Limited to JV partner Kailash Royal Premium Projects Private Limited for R20.3Cr. KRP Auto Industries was incorporated in 2010 as a manufacturer of automobile components at Bangalore. 


Rico’s other JV companies are FCC Rico Ltd, Rico Jinfei Wheels Limited and Magna Rico Powertrain Private Limited.


Last year, Continental AG acquired Modi Rubber for #3.87Mn.


(Source : http://www.dealcurry.com/20120228-Rico-Auto-To-Sell-Continental-Rico-JV-Stake-To-Partner.htm)

FAW Foundry keen on automotive casting sector in India

KOLKATA:

China's FAW Foundry said it wants to enter the automotive casting business in India.

"We want to know the nature of automotive casting sector in India and want to partner with a local company in the country," FAW Foundry Company president Sun Feng told reporters on the sidelines of an interaction here.

A part of the state-owned FAW ( First Automotive Works) Group Corporation of China, FAW Foundry is engaged in the manufacture of castings for automobiles manufactured by its parent.

He said that representatives of FAW Foundry would visit Tata Motors' plant at Pune shortly to understand the nature of automotive castings business of the country.

Feng was leading a seven-member delegation of Faw Group to the city.

They were also apprised of the existence of a major foundry belt in Howrah by members of Bharat Chamber of Commerce.

(Source : http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/faw-foundry-keen-on-automotive-casting-sector-in-india/articleshow/12070584.cms)

Bosch net up 33.5% at Rs 281 cr in Q4

Bosch, the largest supplier of automotive components to original equipment manufacturers (OEMs), on Tuesday reported 33.5 per cent rise in net profit at Rs 281 crore for the fourth quarter ended December 31 compared to the corresponding quarter previous year. The net sales for the quarter grew 11.4 per cent to Rs 1,918.5 crore compared to the same quarter last year. The rise in profits is mainly attributed to a good growth in the after market sales, improved margins and higher treasury income, which went up by 80 per cent year on year at Rs 100 crore. The operating margins improved from 15.2 per cent in December quarter of 2010 to 15.7 per cent in 2011.

(Source : http://www.businessstandard.com/india/news/bosch-net335-at-rs-281-cr-in-q4/466237/)

SKF net up 18% in 2011

PUNE, FEB. 27: 

SKF India has posted a net profit of Rs 208 crore during the calendar year 2011, translating into a growth of 18 per cent year on year.

Income from operations for the year ended December 31, 2011 rose 17 per cent to stand at Rs 2,416 crore (Rs 2,068 crore) in the previous year.

Earnings per share at the end of the year were Rs.39.5 (Rs 33.6). The board has recommended a dividend of 75 per cent for 2011.

During the quarter ended December 31, 2011, the bearings company's net profit declined by 8 per cent over the corresponding period of 2010, to stand at Rs 40 crore. The incomes during the two quarters under review were Rs 600 crore and Rs 542 crore respectively, a rise of 10.7 per cent YoY.

Commenting on the results, Mr Shishir Joshipura, Managing Director, SKF India Ltd, said, “Rising input costs, rupee depreciation and high interest rates put pressure on margins,” adding that the company will continue investment plans in accordance with the country's medium and long-term growth outlook.

(Source : http://www.thehindubusinessline.com/companies/article2938810.ece)

Adhunik Metaliks in talks to sell forging arm Neepaz V Forge to Amtek Auto

17 FEB, 2012, 06.13AM IST, M V RAMSURYA & RAKHI MAZUMDAR,ET BUREAU



MUMBAI/KOLKATA: Steel manufacturer Adhunik Metaliks is in advanced talks to sell its unlisted forging subsidiary to automobile component maker Amtek Auto for Rs 230 crore, people close to the development said.

The subsidiary, Neepaz V Forge, manufactures forged products for automobile players such as Tata Motors, Ashok Leyland and Mahindra & Mahindra.

The deal size includes Rs 160 crore debt that Neepaz has on its books, these people said.

"Adhunik has now entered the final lap of negotiations with Amtek," one of the people quoted above said, adding that the deal is likely be finalised by April.

Adhunik will retain a minority stake in the forging unit and continue to supply raw materials from its Rourkela unit in Orissa to the forging plant located in Nagpur in Maharashtra, he said.

Adhunik and Amtek refused comment.

Kolkata-based Adhunik has been seeking a buyer for Neepaz for some time and had earlier engaged in discussions with German steel maker Thyssenkrupp and Japan's Sumitomo Corporation. Adhunik is selling the forging unit as it wants to focus on its core business, another person aware of the negotiations said.

"For the past six to eight months, Adhunik has been looking for a joint venture partner who can expand and grow the forging business," this person said. "The group is willing to offer the new partner management control to run the business as forging is not a core area for Adhunik."

Amtek Auto, which is India's second largest forging company after Bharat Forge, has been looking for local units to grow its capacity at a time when slow auto sales in the fiscal third quarter shaved off valuations of most Indian companies. Analysts say prospects have brightened for a strong fourth quarter with car sales in January growing 9% and sales in February being robust so far.

Shares of both Adhunik and Amtek gained on Thursday, a day when the country's benchmark stock index, Sensex, ended marginally lower. While Adhunik rose 1.9% to close at Rs 54.15, Amtek was up 2% at Rs 130.95 on the Bombay Stock Exchange. Adhunik has surged 24% in the past month, while Amtek has risen 23%.

(Source : http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/engineering/adhunik-metaliks-in-talks-to-sell-forging-arm-neepaz-v-forge-to-amtek-auto/articleshow/11920931.cms)

Gujarat’s unknown ancillary units move the world

10 FEB, 2012, 09.27AM IST, VIJAYSINH PARMAR & ANKUR JAIN,TNN


RAJKOT/AHMEDABAD: Gujarat kept the wheels of the world turning much before Nanos and Fords drove into the state. Over 50 small and medium firms, many of them virtually unknown and concentrated in the Saurashtra region, have been supplying critical parts to top global auto brands for years now. Given their skills in precision engineering, these ancillaries are enhancing the state's magnetism in luring auto giants to set up base here. As Sanand emerges as an important auto hub, many of them plan to shift here.

Bhavnagar-based Tamboli Castings Ltd (TCL) supplies components directly and indirectly to Ferrari, Jaguar, Ford and John Deere, among others. The firm supplies connecting blocks used inside direct injection gasoline engines for cars - considered a car's heart - to a German company, which supplies to Ferrari. "Precision is key as there is no room for errors," says Mehul Tamboli, director of TCL.

When recently-launched Ducati Monster 795 roared on Indian roads, over 500 workers in a workshop in Rajkot had a sense of satisfaction. GM Exports, a firm with a turnover of Rs 100 crore, supplies shafts, tappets and engine covers to the iconic mean machine.

"We approached Ducati as my son adores their bikes. We have been supplying components to them since 2006," says Vasant Mangrolia, perhaps the first supplier to Ducati from India.

Another medium-sized firm, Microsign Products, which employs a large number of people with disabilities, ended US auto major General Motors' hunt for quality plastic fasteners. "Before we started supplying to GM, the company imported the component from the US," says Nisheeth Mehta, CEO of the Bhavnagar-based company, which also supplies fasteners to Hero Honda and Hindustan Aeronautics Ltd.

Rajkot's Amul Industries sells stainless-steel connecting rods to a number of equipment manufacturers in Italy, Turkey, USA, Dubai and Egypt among others who directly supply to brands like Land Rover, Toyota and Caterpillar.

"About 15% of our business comes from exports," said Nipul Santoki, manager exports, Amul Industries.

Ahmedabad-based Poggenamp Electrical Steel has been supplying prototypes for leading hybrid electric vehicles in Poland and Germany. "Since 2011, we have been providing prototypes or motor designs to the Poland government, which approves the design before passing it on to companies," Gauttam Nagarsheth, chairman, Poggenamp Electrical Steel said. The company has also been providing components used to make bicycles and wheelchairs to a German bicycle maker since 1995.

(Inputs by Chitra Unnithan)

(Source : http://economictimes.indiatimes.com/news/news-by-industry/auto/auto-components/gujarats-unknown-ancillary-units-move-the-world/articleshow/11832972.cms)

Japanese auto parts SMEs seek buyers and technology collaborations

Monday, 06 Feb 2012


A Japanese delegation of Small and Medium Enterprises from the auto component sector is in Chennai looking for potential buyers for their products, and partners for technological collaboration, including licensing of their technology.

The Japanese SMEs showcased their products and technology at a seminar on, ‘Auto Component Industry in South India- Exploring Sourcing Opportunities from Japan’ organized jointly by the Confederation of Indian Industry, Japan External Trade Organization and the Auto Component Manufacturers’ Association of India here in Chennai.

Mr Shinya Fujii director general of JETRO Chennai said that JETRO which had opened its office in Chennai in May 2010, has been receiving several hundreds of enquiries and over 200 Japanese business visitors from diverse sectors including automobile, engineering and machinery, electronics, logistics, infrastructure, trading, IT and IT enabled services.

He said Tamil Nadu was known as the Detroit of India and there were 131 Japanese auto component companies operating in and around Chennai.

Mr Fujii suggested the creation of `factories on rent’ in India as in China and Taiwan, to facilitate easy investment and production by the SMEs.

Mr Kensuke Ichihara head of the delegation and director general manufacturing and environment industry department of JETRO, Tokyo said that more and more Japanese companies, in addition to over 280, already in Tamil Nadu, were keen on investing in the State and India in general for manufacturing for local sales and exports, though they were concerned about the infrastructural constraints like roads and power supply.

Mr Ichihara said that Japanese auto industry was facing saturation in the domestic market and in China, which was a focus country for long. They have to diversify and they have identified India as the best bet. He said that these companies have to find new markets as the automobile and auto component sectors have been the major contributors to Japanese GDP and employment.

The Japanese interest in India was owing to its strong economic fundamentals, a large and expanding market, skilled human resources, and the facilities for exports to Asian, African and European countries.

(Source : http://www.steelguru.com/indian_news/Japanese_auto_parts_SMEs_seek_buyers_and_technology_collaborations/248886.html)

Japanese auto parts SMEs seek buyers, technology collaborations

Friday, February 03, 2012





New Delhi: A Japanese delegation of Small and Medium Enterprises (SMEs) from the auto component sector is in Chennai looking for potential buyers for their products, and partners for technological collaboration, including licensing of their technology.

The Japanese SMEs showcased their products and technology at a seminar on, ‘Auto Component Industry in South India- Exploring Sourcing Opportunities from Japan’ organized jointly by the Confederation of Indian Industry (CII), Japan External Trade Organization (JETRO) and the Auto Component Manufacturers’ Association of India (ACMA) here in Chennai on Tuesday.

JETRO which had opened its office in Chennai in May 2010, has been receiving several hundreds of enquiries and over 200 Japanese business visitors from  diverse sectors including automobile, engineering and machinery, electronics, logistics, infrastructure, trading, IT and IT-enabled services, Mr Shinya Fujii, Director General of JETRO Chennai said.

He said Tamil Nadu was known as the Detroit of India and there were 131 Japanese auto component companies operating in and around Chennai.

Mr Fujii suggested the creation of `factories-on-rent’ in India as in China and Taiwan, to facilitate easy investment and production by the SMEs.

Mr Kensuke Ichihara,  Head of the Delegation and Director General, Manufacturing and Environment Industry Department, JETRO, Tokyo,  said, more and more Japanese companies, in addition to over 280,  already in Tamil Nadu, were keen on investing in the State and India in general for manufacturing for local sales and exports, though they were concerned about the infrastructural constraints like roads and power supply.

The Japanese auto industry was facing  saturation in the domestic market and in China, which was a focus country for long. They have to diversify and they have identified India as the best bet, Mr Ichihara said.

These companies have to find new markets as the automobile and auto component sectors have been the major contributors to Japanese GDP and employment, he said.

The Japanese interest in India was owing to its strong economic fundamentals, a large and expanding market, skilled human resources, and the  facilities for exports to Asian, African and European countries.

He said the best way to level the imbalance in Indo-Japanese trade was to manufacture Japanese products in India instead of importing them from Japan.

Along with diversification, the Japanese companies were engaged in research and development of next generation electric, hybrid and plug-in vehicles, Mr Ichihara said. It was estimated that in 10 years these hybrid vehicles would hold 10 to 12% of the market. To be in tune with the changing scenario new technical systems and detailed roadmap were being put in place, he said.

Stating that  “you can find a long-term and reliable partner in a Japanese company’’, Mr Ichihara said their competitive characteristics included, ability to meet the pressing demand of the auto manufacturer,  to improve process without increasing prices, to stick to delivery schedules, and shift from mass production to variable small production.

Mr  P S Rajamani, Co-Chairman, International Networking Forum, CII Southern Region and Wholetime Director, Simpson  & Co Ltd said, the global auto component industry was estimated to be worth $1.2 trillion in value and was likely to increase to $ 1.7 trillion by 2015.

“Sourcing from low cost countries is likely to increase from $ 65 billion in 2002 to $ 375 billion by 2015. In this global scenario, Indian automotive industry has the potential to emerge as one of the largest in the world’’, he said.

He said  India’s share in the global auto components market would increase  from the present 0.9% to 2.5% by 2015.

From a low-key supplier, providing components to the domestic market alone, the auto components industry in Chennai has emerged as one of the key auto component centers in Asia and was a significant player in the global automotive supply chain.  “Chennai is now a supplier of a range of high value and critical automobile components to global automakers like General Motors, Chrysler, Toyota, Ford and Volkswagen and others’’, he said.

Mr Rajamani said the automobile industry was delicensed and foreign equity investment  up to 100% for the manufacture of automobiles were allowed.

Considering the market potential the Investment Commission has set a target of attracting foreign investment worth $ 5 billion for the next seven years .

Mr Arvind Balaji, Chairman, Southern  Region, ACMA and Joint Managing Director, Lucas-TVS Ltd said, India was the future market for automobiles and auto components. Indian products have already attained global standards and they were being used by vehicle manufacturers all over the world.

He said India itself was a growing automobile market with vehicle production expected to reach 10 million by 2020. India had good supply of skilled manpower world-class product development and design capabilities, export capabilities and  IT capabilities.

He said the intellectual property (IP) protection in India was very strong and there had been increased focus on R & D.

The foreign companies could make green field investment or partner with Indian SMEs. They could also discover their supply base in India and choose the level of partnership which could be narrowed down to a single product.

With strong economic fundamentals, a robust domestic market for automobiles and adequate export facilities the Japanese companies could think of full-fledged manufacturing facilities in India, not just of components, Mr Balaji said.

(Source : http://www.orissadiary.com/ShowBussinessNews.asp?id=31792)

Policy for auto component manufacturing on anvil

Jayajit Dash / Kolkata/ Bhubaneswar Feb 02, 2012, 00:39 IST


In a bid to woo investors in automotive components manufacturing, the state industries department is mulling to come out with a dedicated policy for the sector.

Spurred by the buoyancy in the auto sector in the country, investment in the ancillary sector is expanding rapidly and the state government is keen on tapping this potential.


“We are going to come out with an exclusive policy for manufacturers of auto components. The state has good potential to be one of the leading hubs for auto component manufacturing and we will be offering a host of incentives for such investors. The draft of the policy will be prepared soon after studying the incentives offered by other states. We will also hold due consultations with prospective investors and other stakeholders,” said a senior government official.
Orissa which has attracted investments worth over Rs 9 lakh crore across sectors, mostly from mineral-based industries, has attracted only one major investment in the auto component manufacturing space.

RSB Transmission had entered into a MoU (Memorandum of Understanding) with the state government for setting up an auto component manufacturing plant at Choudwar near Cuttack at an estimated cost of around Rs 400 crore.

The state offers good resources to support automobile component manufacturing units like availability of quality pig iron, pure aluminium ingot, steel flat products and steel rounds.

In addition to this, there is availability of skilled personnel for the sector with manpower drawn from institutes operating in the city like Central Tool Room Training Centre and Central Institute for Plastic Engineering & Technology (CIPET).

The Indian auto component industry has been registering growth of 20 per cent per annum since 2000 and is projected to maintain high growth range of 15-20 per cent till 2015.

The industry which touched $10 billion in 2005-06 is expected to grow four-fold to $40 billion by 2015.

(Source : http://www.business-standard.com/india/news/policy-for-auto-component-manufacturinganvil/463457/)

`Buy` Wheels India; target Rs 345: Firstcall

Source: IRIS Exclusive (30-JAN-12)

Firstcall Research has recommended `Buy` on Wheels India with a price target of Rs 345 as against the current market price (CMP) of Rs 305 in its report dated Jan. 28, 2012. The broking house gave the following rationale:


>Wheels India engages in the manufacture and sale of automotive components in India and internationally.

>The Company has entered into a Technical Agreement with Topy Industries, a leading Japanese steel wheel manufacturer towards process, design and development of steel passenger car wheels.

>The company supplies 2/3rd of the domestic market requirement and exports 18% of the turnover to North America, Europe, Asia Pacific and South Africa.

>Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 65% over 2010 to 2013E respectively.

>During the quarter, the company has reported Net Profit increased to Rs.109.80 million from  Rs.51.40 million in previous year same quarter.

>Wheels India disclosed results for the quarter ended September 2011. Net sales for the quarter moved up 19% to Rs.5041.90 million as compared to Rs.4238.80 million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs.109.80 million from  Rs.51.40 million in previous year same quarter. The Basic EPS of the company stood at Rs.11.12 for the quarter ended September 2011.

Valuation:

We expect that the company will keep its growth story in the coming quarters also. We recommend `Buy` in this particular scrip with a target price of Rs.345 for medium to long term investment.

Click here to view full report

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.

Auto parts firms see scope for shopping

By R Srividhya Jan 29 2012 , Chennai


Distressed assets up for grabs in Europe
Europe’s ongoing debt crisis may well turn out to be an attractive shopping opportunity for Indian engineering and auto components companies. Many distressed assets in Europe, especially in the engineering and automotive hubs of Germany, Italy and France, are up for sale, and Indian companies are keen to make acquisitions that will facilitate their wider global presence.

PE and VC firms admit that they are working on such deals, and at least a handful expected to close in the next one-two months. Only two weeks ago, Aurangabad-based component maker Varroc Group acqu­ired 80 per cent in Europe's largest two-wheeler headlights and taillights maker TriOM. Around the same time, JBM Group acquired Italy-based engineering services company Tesco Go.

Spurred by the advent of major carmakers to India over the past 20 years, India has built a formidable domestic components industry with a turnover of $40 billion that is projected to grow at 11 per cent annually to $113 billion by 2021, manufacturing electrical parts, equipment, suspension and braking parts, body and chassis, engine parts, and drive transmission and steering systems. Automotive Components Manufacturers’ Association (Acma) projects the industry’s total investments at up to $2.5 billion during FY12, up from $2.3 billion in the previous year. Exports are projected to grow from a little $5 billion now to $29 billion in 10 years.

“The valuations of companies in Europe are quite attractive now. Indian companies can make acquisitions there, get access to new technology and clients and move manufacturing units here as factory production is more expensive in Europe,” Jacob Kurien, partner, New Silk Route pointed out.

The company has been advising Rajkot-based hot forged rings maker, Rolex Rings for an acquisition or a joint venture in Europe.

“In the months to come, we expect a lot of overseas M&A activities to happen in the engineering and auto components space. We are advising a few deals ourselves,” C Venkat Subramanyam, founder and director of investment bank Veda Corporate Advisors told Financial Chronicle. Veda provides advisory services in the private equity and M&A space.

“For companies having the strategic perspective

to expand, this is a good time to look for an European buy.

The acquisition will give Indian companies a good global platform, advanced technology and production base in that part of the world and in proximity

to clients,” said Nishant Arya, executive director, JBM Group.

JK group company and maker of industrial belts Fenner (India) is looking to buy companies that have similar technology and customer access in different locations in

Europe, according to

the its president AN Ravichandran.

Valuations may be attractive and access to newer technology easier through such acquisitions, but getting the right cultural and technological fit is also important when making such acquisitions, industry members said.

“We have been seeing industry members scouting for acquisition opportunities in automotive hubs right from Germany to as far as Macedonia. But companies should also look at a merger that is seamless operationally, legally and culturally,” asserted Vinnie Mehta, executive director, Acma.

It would be wrong to make an acquisition just because it’s available cheap, industry members said. Recently, Kolkata-based Ruia group ran into trouble while taking control of its recent French acquisition, Preciturn,

after local workers opposed the move.

"I do not know if the current EU situation will cause more opportunities for M&A. Rane would still look at acquisitions more from a strategic fit rather than mere low valuation," reasoned L Ganesh, chairman of leading auto component house Rane Group.

As per the latest financial data available with company data provider Capitaline, 99 listed auto components companies have posted a combined annual turnover of Rs 68,862 core, with net profit of Rs 4,011 core.

Of these companies with more than billion-dollar turnovers are Motherson Sumi (Rs 8,175.63 crore; exports 61.88 per cent), Sundaram Clayton (Rs 7,229.68 crore; exports 15.3 per cent) and Bosch (Rs 6,699.11 crore; exports 12.76 per cent). Other major components makers include, Exide, Tata AutoComp Systems, Amtek Auto and Amara Raja Batteries.

(With inputs from G Balachandar in Chennai and Amit Mudgill in New Delhi)

(Source : http://www.mydigitalfc.com/news/auto-parts-firms-see-scope-shopping-351)

Ruia’s takeover bid for German auto component maker fails

Meteor Gummiwerke was, by far, the biggest by revenue in a series of acquisitions announced between May and September last year


Manish Basu


Kolkata: Chartered accountant-turned-takeover specialist Pawan Kumar Ruia has washed his hands of Meteor Gummiwerke KH Badje GmbH and Co.—an embattled German automotive component maker that he was to acquire from a trust representing its controlling shareholders—after he failed to inject cash for a rescue.

Ruia had in May last year announced that he had concluded a deal to take over Meteor Gummiwerke for an undisclosed price, described by the German firm as “symbolic” in one of its statements.

Pawan Kumar Ruia, chairman, Ruia Group. Indranil Bhoumik/Mint

The acquisition of this firm, along with two others announced in close succession last year, would have catapulted the Ruia Group to a leadership position in manufacturing rubber sealing systems for the automobile industry.
Meteor Gummiwerke was, by far, the biggest by revenue in a series of acquisitions announced between May and September last year.

But, strapped for cash, the Ruia Group had to abandon almost all the acquisitions one by one—in France, Turkey and Germany—of rubber sealing system makers it had announced in 2011.

Meteor Gummiwerke had in 2010 earned €222 million (Rs. 1,438.5 crore today) in revenue from the sales of rubber sealing systems to car makers such as Bayerische Motoren Werke AG (BMW), Daimler AG, Fiat SpA, Renault SA and Porsche Automobil Holding SE.

Founded in 1954, Meteor Gummiwerke has three plants in Germany, two in the Czech Republic and one in the US. It employs at least 2,500 people.

After the Ruia Group failed to infuse cash to revive it, Meteor Gummiwerke on 13 January filed for bankruptcy and an administrator was appointed by a German court, according to a statement issued by the administrator.

The Ruia Group’s takeover of Meteor Gummiwerke was to be concluded in early October. The firm had even posted a statement on its website saying the deal had been concluded, with the Ruia Group paying shareholders the price agreed upon and bringing in the cash it had committed to revive the firm— an indication that the deal collapsed at the 11th hour.

In an emailed statement, the Ruia Group said: “(At) the time the management (of Meteor Gummiwerke) decided to take the company to insolvency (administrator), Ruia Group was neither in management of the company nor any shares were transferred to it.”

Emails sent to Burkhard Bruhl, Meteor Gummiwerke’s chief executive officer, were not answered.

The insolvency administrator is currently helping Meteor Gummiwerke find a new buyer, and the Ruia Group is “out of the game”, according to Hildesheimer Allgemeine Zeitung, a German newspaper.

A contract was signed but did not become effective because the Ruia Group did not pay, said a spokesperson for the insolvency administrator in an emailed statement. As a result, Ruia never became the owner of the company.

Christopher Seagon, the administrator, “is now stabilizing the business operations and will likely set up a process of finding a new investor,” he added. A statement by Seagon earlier said the firm’s Czech and US subsidiaries had been kept out of the insolvency proceedings.

In October, Ruia had said his acquisition of Standard Profil AS, a Turkish firm, was “under review” in the light of the “global economic slowdown”. He later admitted to have abandoned the proposed acquisition. The Ruia Group had announced its plan to acquire Standard Profil in May.

Last month, the Kolkata-based group headed by Ruia also lost control of a key unit of Groupe Preciturn, a French auto component maker that it was to acquire. In early December, one of Groupe Preciturn’s units was declared bankrupt and seized by a commercial court in France.

In India, the Ruia Group is under fire from tyre maker Dunlop India Ltd’s creditors. The group acquired Dunlop in 2005. A number of creditors have filed wind-up petitions in the Calcutta high court seeking appointment of an administrator to take over Dunlop’s assets. The company has suspended operations and has asked the court for time to prepare a repayment plan.

In an interim order, the court restrained Dunlop from transferring its assets, scuppering the Ruia Group’s plans to transfer to itself the rights to 100-odd trademarks currently owned by the beleaguered tyre maker.

(Source : http://www.livemint.com/2012/01/24001030/Ruia8217s-takeover-bid-for.html?h=B)