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/)