Two-Wheeler Sales Skid After Government’s Currency Purge

At a time when one has to stand in queue for hours to withdraw cash from ATMs or a bank branch, and yet walk out with a maximum of Rs 2,000, purchasing a two-wheeler is likely to be low on the priority list.

Retail sales trends at two-wheeler dealerships across the National Capital Region (NCR) have shown a sharp decline since the demonetisation of Rs 500 and Rs 1,000 currency notes came into effect on the midnight of November 9. Authorised dealers of some of the biggest two-wheeler manufacturers such as Hero MotoCorp Ltd., Honda Motorcycle and Scooter India Pvt. Ltd., TVS Motor Company Ltd., Bajaj Auto Ltd., Eicher Motors Ltd.’s Royal Enfield, and the premium player, Harley-Davidson India had a similar story to tell.

"We used to sell 20 vehicles per day earlier, and since the demonetisation move, sales have fallen to 2-3 units per day. The footfalls for enquiry have also drastically dropped."
 - Rohit Gaur, General Manager, Jasodha Auto (an authorised dealership of Hero MotoCorp)

Typically, two-wheelers purchases, particularly in the commuter segment, are carried out through cash, and the temporary cash liquidity crunch seems to have had a drastic impact on the fortunes of dealers.

“It may be a good move in the long term, but for now sales have stopped. Close to 95 percent of our customers pay by cash, and only a handful use other means such as credit cards. With only Rs 2,400 in their hand, it is not surprising that they aren’t buying two-wheelers,” said a representative of a Honda Motorcycle dealership, who did not wish to be quoted.

Hero MotoCorp and Honda Motorcycle are the two largest two-wheeler manufacturers in India, and dealers of both companies said sales were down to one-fifth of what they were before November 8.

A TVS Motor dealer said he managed to sell only one vehicle in the first two days after demonetisation came into effect. His average daily volume was around 8-10 units per day before the government’s latest move to fight black money.
Segments above the commuter category fared only a little bit better.

"We have seen a drop in sales volumes, yes, but the number hasn’t been drastic. Against daily sales of around 3-4 units, the number has fallen to roughly 2-3 units a day."

Tapan Sharma, Dealer Principal, Aman Automobiles (an authorised dealership of Royal Enfield

He added though that the situation was much worse for after sales works such as repairs and servicing, and said the decline in that space was nearly 60 percent.

Things worsened again at the top of the pyramid. Harley-Davidson, a premium motorcycle manufacturer, has seen sales drop to almost zilch. “Sales have fallen to almost nothing over the past week. This month has been the worst in the year so far. The few customers that did turn up, brought with them bundles of notes of Rs 500 and Rs 1,000 denomination which we could not accept. The very few sales that we did manage to make were all via alternate sources of payment such as debit cards,” said a representative of a Harley-Davidson dealership in south Delhi.

"This sort of a fall was expected. With limited cash in the market, people’s priorities have changed…it is more about running the house now. This is expected to last for at least a quarter. November is expected to be weak in terms of sales, as also December."

- Abduj Majeed, Partner-Assurance, PricewaterhouseCoopers India

Typically, December is a slow month in terms of vehicle sales as buyers choose to wait for a month to get a vehicle which is manufactured in the new year. November, which is a festive month and usually sees high sales, has been hit this time around.

“It is likely that manufacturers would cut production. It is unlikely that they will pile up inventory with this being the end of the year. The situation is expected to improve only by February-March,” Majeed added.

The industry lobby group, Society of Indian Automobile Manufacturers (SIAM), also said it had expected a temporary fall in numbers. “We had expected this temporary fall, but things will improve soon,” said Sugato Sen, Deputy Director General, SIAM. Sen added that a downward revision in the sales forecast for the financial year has not been made yet.

Given the prevailing sentiment in the market, with the common man scrambling to arrange for funds for essential commodities, a substantial fall in November two-wheelers sales figure is almost a certainty.

(SOURCE : http://www.bloombergquint.com/business/2016/11/18/two-wheeler-sales-skid-after-governments-currency-purge)

Driverless cars to hit auto parts biz

Matsatsugo Horie/ Bloomberg
Source : Financial Chronicle

A Japanese company that once revolutionized the auto industry by inventing electric power-steering now finds itself on the wrong side of the latest technology innovation: driverless cars.

Jtekt Corp.’s innovation almost three decades ago outperformed the traditional hydraulic technology and allowed the company to become one of the biggest suppliers to Toyota Motor Corp. and other carmakers. It’s now made more than 100 million of the units and claims a quarter of the global market.

Tetsuo Agata, president of the Osaka-based company, is afraid that if his company doesn’t come up with a product for cars with no steering wheel it could end up supplying no one.
“We’re going to lose the foundation of our business,” Agata, 62, said in an interview in Nagoya City. “We’re going to go under if we fail to catch up. I have a strong sense of crisis.”
Steering is one of the links in the vast auto-parts supply chain that’s having to adapt to survive the new technologies and companies that are upending the auto industry.

Traditional manufacturers like Toyota and Nissan Motor Co. now compete with new entrants such as Tesla Motors Inc., Google Inc. and Uber Technologies Inc. Toyota and Nissan are racing to develop limited hands-free expressway driving as early as next year, while Google and Uber are competing to put driverless autos on public roads.

“A lot of parts suppliers will be affected by the move to autonomous driving,” said Goro Tanamachi, an analyst with IHS Automotive. As well as steering, brakes, transmissions and other drive-train parts could all be shaken up, he said.

Gujarat auto component makers focus on exports

Slowdown in domestic demand forces auto makers to eye export revenues
Sohini Das  |  Ahmedabad  April 10, 2014 Last Updated at 20:35 IST

With demand from domestic original equipment manufacturers (OEMs) in slow lane, auto-component makers in Gujarat are eyeing the exports market to keep afloat in these tough times. It is estimated that exports from the Rajkot-based autoparts hub of Gujarat during 2013-14 was about Rs 200-250 crore, up by around 20-25 per cent from last year.

Rajkot houses as many as 500 small and medium scale component makers, of which around 50 odd firms supply directly to OEMs. With the domestic automotive industry reeling under slowdown in demand, the production at the auto-component hub at Rajkot is down by almost 40 per cent, and the industry feels no immediate relief is in sight.

"While more than 75-80 per cent of our production goes to OEMs in India, people indeed are focussing more on exports to boost their revenues," said Suresh Santoki, managing director of Amul Industries, makers of connecting rods and crankshafts for automobiles. Amul Industries is one of the bigger component makers in the region, with plants at Rajkot and Sanand in Gujarat, apart from Pune in Maharashtra, Hyderabad in Andhra Pradesh, Jamshedpur in Jharkhand, Rudrapur in Uttarakhand, and Ranipet in Tamil Nadu.

It has exported engine components worth Rs 56 crore this fiscal (from its Rajkot plant), which is up by 10 per cent on a year-on-year basis. "The international markets are also tough at the moment, however, we have managed to export to countries like Brazil, Germany, US, Iran, Turkey and a few other West Asian countries. This would be around 25 per cent of our overall turnover," Santoki explained adding that most of the bigger component firms in Rajkot have focussed on exports this fiscal.

Others like Bhavani Indsutries which makes transmission components, and some small bearing makers too have focussed on the export markets this year. A local manufacturer and exporter of bearings said that exports from the region are up by 20-25 per cent, as many companies who have traditionally not been exporting have tapped international clients this year. In Gujarat, majority of the exports have come from Rajkot based component makers, other clusters like Halol, Vadodara, Ahmedabad have mainly catered to the demand of OEMs present in the locality, claimed industry insiders.

Kirti Rathod, chairman and managing director, Delux Bearings and deputy chairman of the Automotive Component Manufacturers Association (ACMA), western region pointed out that companies have been investing in building infrastructure for exports for the past few years.

"On a pan-India basis, between 2011 to 2013, major investments have taken place in the auto-component space, to the tune of Rs 2,500-3,000 crore. This has gone into getting the systems in place, as well as product development," he said adding that exports have been up in the range of 20-35 per cent in recent times. Santoki too said that his firm had invested close to Rs 25 crore in the last few years in plant and machinery as well as product development for the export market. ACMA has sought that in order to make exports more competitive, the government should extend the 5 per cent interest subvention on investments made in capital equipment.

Vinnie Mehta, executive director, ACMA felt that with the domestic industry on a slow lane, and no respite seen anytime soon, several component makers in the country, including the SMEs in Gujarat have focussed on exports this year. ACMA, however, does not collate region-wise data on exports.

(Source : http://www.business-standard.com/article/companies/gujarat-auto-component-makers-focus-on-exports-114041001218_1.html)

Volatility a new lesson for Indian auto sector - ACMA

Volatility has impacted organisations of all sizes, across all major industries but most significantly the MSMEs. The industry is under constant pressure from what is termed as VUCA forces, i.e. Volatility, Uncertainty, Complexity and Ambiguity, which continue to characterise the business environment.

VUCA has affected the market such that there is a slowdown coupled with other adversities in macro-economic factors that have created negative sentiments in the industry. However, every cloud has a silver lining and this holds true for the Auto industry as well.

In light of above, ACMA with the Ministry of Micro, Small & Medium Enterprises jointly organised 3rd MSME summit in New Delhi on March 21st 2013. mr Ajay Shankar, Member Secretary of National Manufacturing Competitiveness Council inaugurated the summit, with Mr N K Maini, Deputy MD of SIDBI as the Guest of Honour and Mr Sudam Maitra, COO (Supply Chain) of Maruti Suzuki India Limited as the Keynote Speaker.

The summit was organised to assess the current business scenario and how component manufacturers, especially the small and medium enterprises can harness this challenging environment to their benefit. Mr N K Maini, redefined VUCA as Vision, Understanding, Communication and Agility and urged the industry to strategize such that the adversity turns into an advantage.

During his inaugural address Mr Shankar, referring to volatility as intrinsic to human civilisation said that “While we have seen growth come to a standstill due to uncertainty and lack of confidence, the challenges for the future are equally daunting. Lack of availability of power, poor managerial bandwidth and low return on investments add to the challenge of unutilised capacity, especially for small Tier 2 and Tier 3 manufacturers. The industry has a lot more ground to cover and become cost competitive, while the Government needs to ensure a dependable and competitive ecosystem and infrastructure, the industry needs to focus on internal efficiencies and opportunities other than the conventional to keep their heads above water.”

At the event Mr Sudam Maitra, referred to VUCA as the ‘New Normal’. To mitigate volatility, MSMEs must strategically design a long term road map, have effective financial planning, prudently manage manpower, work smarter & leaner and focus on limited dedicated yet diversified customers without any compromise on quality. It is imperative that for the auto component industry to be globally competitive, the Tier-1s must hand hold Tier -2/3s to build their capabilities including technology and skilling of personnel.

Further, it is critical that the industry explores tools and best practices such as diversification to newer segments, globalisation, technology absorption, hedging forex, effective cash-flow management and continually innovate, along with working on concepts such as Practical Improvement in Sales and Marketing, improvising quality through innovation, better inventory management, re-examining suppliers credit processes and exploring external markets for increasing business returns to mitigate volatility.

On the occasion Mr Ramesh Suri, Vice President of ACMA said that “The purpose of this summit was to understand the dynamics of the Indian automotive market with focus on MSMEs, the factors affecting their de-growth and what could be the possible strategies to manage the volatility in the industry. The industry and the government will need to collaborate in helping companies manage the challenges especially handholding the Tier 2/3s, the weakest link in the entire automotive value chain”.

At the plenary sessions, the discussions revolved around the need for the auto component manufacturers to be innovative and being able to create higher value addition.

Source – Strategic Research Institute, Steel Guru

http://www.automobileguru.in

<source : http://www.steelguru.com/indian_news/Volatility_a_new_lesson_for_Indian_auto_sector_ACMA/335643.html>

Bhansali Engineering Forms JV With Nippon

By : Pranav Puri | 20 May 2013

Bhansali Engineering Polymers has formed a 50:50 JV with Nippon A&L Inc, to manufacture Nippon’s specialized grades of ABS polymer approved by the Japanese automobile manufacturers globally, ET states.

With this deal, all the buyers of BEPL could source their entire ABS requirement from a single source and Nippon would also direct its Indian customers to buy ABS from them.

This JV shall equip BEPL with rights to use intellectual property of Nippon and to use technical assistance from Nippon in manufacture, make and sell the licensed products.

It will also provide recipes, compounds, sales support, R&D support, new application development for manufacturing ABS and other resins.

Currently, country's annual ABS demand is currently estimated at 1.5 lac tonne, 25% is met through imports, mainly from Japan and JV plans to capture 50% of total imports.

This JV will become an integrated part of auto OEM's supply chain and help them procure ABS (Acrolynotrile Butadine Styrene) of international standard locally in a cost effective manner, he added

BEPL is a vertically integrated petrochemical company that manufacturs ABS which acts as a raw material for leading companies dealing in automobiles, home appliances, telecommunications, luggage, bus body and various other applications.

BEPL is among the country's largest producer of ABS with 51,000 tonne per annum capacity manufactured in Abu Road in Rajasthan and Satnoor in Madhya Pradesh.

The company also produces 600 tonne per month SAN (Styrene Acrylonitrile) and enjoys 40% market in this segment.

BEPL is planning to increase its capacity to 70,000 tonnes by April, 2014 and to 1,25,000 tonnes by September, 2015, with a total capex estimated at about R300 Cr, for which funds will be raised through a mix of equity and external commercial borrowing (ECB).

NIPPON A&L INC. was incorporated as a JV capitalized by Sumitomo Chemical Co., Ltd. and Mitsui Chemicals,INC.,by integrating the ABS resin business and SBR latex business of both Sumika A&L Inc. and Mitsui Chemicals, Inc.

Acrylonitrile Butadiene Styrene (ABS) is an engineering polymer, which finds application in home appliances as well as automobiles. Being a light weight material it typically replaces metal.

With automobile manufacturers using more of speciality polymers and expanding their domestic capacities, the demand for ABS is expected to grow in double digits in 3-5 years.

Last year in November, Auto component firm Anand India entered into a JV with Mando Corporation by acquiring a stake in Mando’s Indian arm Mando Steering Systems India.

Later in December, Japanese air brake component maker, Nabtesco Automotive Corporation, entered into a 49:51 JV with Uno Minda.

(Source : http://www.dealcurry.com/20130520-Bhansali-Engineering-Forms-JV-With-Nippon.htm)

Bosch opens new automotive parts facility in India

ABR Staff Writer
Published 16 May 2013

German auto-parts maker and engineering firm Bosch has opened a new automotive parts manufacturing plant at Oragadam, Chennai in India with an investment of INR350m ($6.39m).

The new 9000sqm facility is built on a land of area 40,000sqm to replace the previously rented facility in order to address the increasing demands.

Bosch Group India president Steffen Berns said the company has expanded its presence beyond its existing automotive component manufacturing sites in Bangalore, Nashik, Chakan and Jaipur with the Chennai plant.

"From the new plant, we will support all Indian automotive customers with our innovative products from electrical drives," Berns added.

The new facility includes design, development and testing, in addition to the production of actuation, thermal and wiper systems for the Indian automotive market.

The company makes components including window lift drives, engine cooling modules, blower modules, wiper linkages, arms and blades for car makers including Hyundai, Ford, General Motors, Mahindra, Renault, Nissan and Volkswagen in India.

(Source: http://www.automotive-business-review.com/news/bosch-opens-new-automotive-parts-facility-in-india-160513)

Windsor Machines to acquire Italian auto component firm Italtech

BY  BHAWNA GUPTA
Thursday, April 25, 2013 - 18:42 IST


The deal is being routed through a European joint venture with Geoplast, a part of Italy’s Pegoraro Group.

Thane-based Windsor Machines is acquiring Italian auto component firm Italtech through an overseas joint venture Wintech S.r.l. for an undisclosed amount, as per a stock market disclosure.

Windsor’s wholly owned Dutch arm Wintech B.V. will hold 80 per cent stake in Wintech while the remaining 20 per cent stake will be held by its Italian joint venture partner Geoplast S.p.a. Wintech in turn will acquire Italtech, an existing technology partner for Windsor.

Italtech manufactures injection moulding machines for moulding of plastics. It is the owner of 'Two-Platen' technology used extensively in the injection moulding industry, especially for production of large size plastic components for automobiles. Its clientele portfolio includes Fiat, Renault, Nissan and their tier I vendors.

This acquisition will enable Windsor to upgrade and develop advanced technology machines to meet European standards and also provide access to the global auto majors who are setting up their operation in India.

Windsor Machines was set up in 1964 under collaboration from R.H. Windsor of U.K. In 1984, it became a part of worldwide operations of Klockner-Werke, Germany and renamed as Klockner Windsor India Limited. It was acquired by Dilip Piramal (of VIP Group) in 1994 and later renamed as Windsor Machines.

The firm came under Kundalias few years ago and has become a key player in the plastic processing machinery industry.

(Source : http://www.vccircle.com/news/engineering/2013/04/25/windsor-machines-acquire-italian-auto-component-firm-italtech)

Auto component sector: Buyer-seller meet held

ACMA, the apex body of the automotive component industry, recently organised a buyer-seller meet in the city. The event, aimed at providing business opportunities to small auto component manufacturers especially in Tier 2 and Tier 3 companies, received an overwhelming response.

Surinder Kanwar, president, ACMA said, "Supply Chain Committee of ACMA initiated the drive to handhold the Tier-2/3 companies through buyers-sellers business meets. Sandeep Balooja, chairman, ACMA (Western Region) said, their endeavour has been to provide value added services to the auto component industry in the

region."

Rattan Kapur, chairman, ACMA-Supply Chain Committee said, the buyers-sellers meet provides a platform for Tier-1 companies to display components for which they need suppliers and for exploring new opportunities.

Competition panel nod for Denso-Pricol merger

OUR BUREAU

NEW DELHI, MARCH 28:

Japanese auto component maker Denso Corporation’s proposed joint venture with Pricol has been cleared by the Competition Commission of India.

The Coimbatore-based automotive instruments and precision engineering company Pricol plans to transfer its Denso Technology Instrument Cluster undertaking to a wholly-owned subsidiary, Pricol Components Ltd.

As per the agreement, upon the transfer, Denso will acquire 51 per cent stake in PCL.

“The proposed combination is not likely to have an adverse effect on competition in India and, therefore, the Commission hereby approves the proposed combination under... (Competition) Act,” CCI said in its order.

Denso Technology Instrument Cluster Undertaking services companies manufacturing four-wheeler personal passenger vehicles from locations in Coimbatore and Gurgaon. Pricol manufactures an array of auto parts, including instrument clusters, speedo cables, sensors, accessories and sub-assembly components, oil pumps, idle speed control valve assembly and vehicle security systems.

Its clients include players in the auto space, including two-wheeler and HCV makers, and a major portion of its business comes from the instruments segment.

The CCI said “there is no horizontal overlap between the products of Denso and Pricol” as neither the Japanese firm nor its affiliates in India are engaged in the business of manufacturing/supply of instrument clusters for four-wheeler personal passenger vehicles, two-wheeler vehicles and commercial vehicles.

Denso had approached the CCI for its approval following the joint venture agreement on February 14.

bindu.menon@thehindu.co.in

Keywords: Japanese auto, component maker, Denso Corporation, Pricol

(Source : http://www.thehindubusinessline.com/companies/competition-panel-nod-for-densopricol-merger/article4558830.ece)

Denso cuts Pricol stake to 4.6%

M Allirajan, TNN | Apr 4, 2013, 03.13AM IST

COIMBATORE: Japanese auto parts manufacturer Denso Corporation has offloaded 71.1 lakh shares in city-based auto instruments maker Pricol on Wednesday. The off-market transaction would fetch Denso, a technology collaborator to Pricol for several years, about Rs. 11 crore at current market prices.

With this, the Japanese major has cut its stake in Pricol from 12.5% to 4.6%. This comes close on the heels of Pricol Holdings buying 4.67% stake in the company. The Denso stake sale comes at a time when Pricol is actively trying to bring in multiple partners for growing its business.

Pricol had tied up with US-based Johnson Controls Enterprise for its Pune plant last March. Only the auto instruments business for cars, SUVs, MPVs and Bajaj's two-wheelers being done out of the Pune plant, which is estimated to generate Rs. 110 crore in revenues, was transferred to the joint venture (JV) company in which both the partners have equal stakes. The Pune plant caters to the requirements of Mahindra and Mahindra (M&M), Tata Motors, GM India and Bajaj Auto.


Interestingly, the proposed JV between Denso and Pricol for four-wheeler personal passenger vehicles was approved by the Competition Commission of India (CCI) only last month.

The proposed JV involved the transfer by Pricol, of its 'Denso Technology Instrument Cluster Undertaking' relating to the four-wheeler personal passenger vehicles, situated at Coimbatore and Gurgaon to Pricol Components, a wholly owned subsidiary of Pricol. Denso would acquire 51% stake in Pricol Components after the transfer.

Pricol, which closed 2011-12 with Rs. 965 crore in revenues, operates six plants across Coimbatore, Pune Manesar and Pant Nagar. The company's stock ended 1.65% higher on the NSE in a weak market.

(Source : http://timesofindia.indiatimes.com/business/india-business/Denso-cuts-Pricol-stake-to-4-6/articleshow/19371949.cms)

Auto component industry's revenue growth to remain weak: ICRA

Source: IRIS (01-APR-13)

The Indian auto and auto components industry is currently facing its most formidable challenge -  that of slowing demand and that too across the board.

"After a frenzied period of 2009-10 and 2010-11 when all automotive spots - domestic OEMs, exports and replacement market - shone bright, the year 2011-12 marked the commencement of a slowdown phase as volumes in the domestic Passenger Vehicle (PV) and Medium & Heavy Commercial Vehicle (M&HCV) segments began to stutter. If the year 2011-12 was bad, the year 2012-13 has turned out to be worse as other segments too including the domestic Two-Wheeler (2W) segment as also exports to overseas OEMs and tier-1 players have come into the grips of the slowdown. While the revenue growth of diversified auto component manufacturers had been steady till Q1 2012-13, the across the board weakness in demand witnessed during the last two quarters has tended to neutralize this structural advantage otherwise enjoyed by such players," ICRA Research said.

On the exports front, auto component supplies to Europe had already been witnessing sluggish growth over the last few years, but steady expansion in demand for Light Vehicles and Commercial Vehicles (CVs) in North America was adequately offsetting the overall exports weakness, it said. However, starting Q2 2012-13, auto parts exports to USA also have declined significantly, particularly related to parts meant for CV applications due to sharp contraction in demand (partly due to inventory correction due to build-up during H1CY2012). Component suppliers to the domestic replacement market have also been experiencing moderation in growth, but this segment, as expected, has been relatively more resilient if not fully immune. As per our sample of 35 publically - listed auto component manufacturers, the average revenue growth of these select entities (during the last eight quarters) has been steadily declining with YoY growth being lower in each passing quarter since Q1 2011-12.

''Yet, the revenue growth of select auto component manufacturers has been much higher than the industry’s on the back of market share gains, favourable change in model mix, rise in content per vehicle, besides revenue accretion due to corporate actions such as acquisitions and amalgamations. Over the short term, we expect the auto component industry's revenue growth to remain weak in the absence of immediate demand triggers for end-users across domestic automotive segments, besides an uncertain global economic environment resulting in slow automobile demand recovery and hence faltering export volumes,'' it added.

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.

(Source : http://www.myiris.com/newsCentre/storyShow.php?fileR=20130401164547715&dir=2013/04/01)

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)