Auto component major Motor Industries Company Ltd (Mico), a Robert Bosch Group company, has deferred its investment plans worth Rs 250 crore because of recession in the industry and delay in implementing Euro II emission norms in the country.
"We had earmarked around Rs 500 crore for investment plans. Only around Rs 250 crore has been invested so far and the rest has been deferred," Mico managing director Andreas Nobis said. Nobis said around Rs 150 crore had been earmarked for investments to gear up for Euro II norms implementation. "But the government has put off introduction of Euro II norms till 2005," Nobis said.
Another Rs 100 crore had been earmarked for expansion and introduction of certain products but because of the recession in the auto industry, these investments too have been put off.
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Of the investments made so far, around Rs 125 crore has been pumped into the Jaipur plant, around Rs 40 crore into Mico's application centre and the rest into expansion of its exisiting facilities.
Nobis said recession in the industry had hit Mico hard and the company has, for the first time, resorted to closing down of its factory in Bangalore and Nashik for five days last year.
Mico also resorted to five-day week for sometime because of poor business and high inventory build-up.
"Certain targets have crashed but it has been offset by increase in export, audio systems, packaging machinery and power tools," Nobis said.
He said the company expects 15 per cent growth from exports, audio systems, packaging machinery and power tools during the next financial year.
Nobis said the company plans to enter into new markets and increase its export business. For example, it plans to market its spark plugs in ASEAN countries. "Nearly 14 per cent of our turnover comes from exports," Nobis said. Within three years, the company expects around 20 per cent of its turnover to come from exports.
Mico manufactures spark plugs, diesel fuel injection pumps, Blaupunkt car audio systems at its factories in Bangalore, Jaipur, Naganathapura and Nashik. It currently has a 80 per cent market share in diesel fuel injection pumps.
During the last one year, the demand for auto ancillaries has reduced because of poor automobile demand. Most auto ancillary companies have reported a decline in profits and margins in the current financial year, as demand has been low resulting in a pressure on their margins.
Mico recently went in for a buy back of its shares from its shareholders. In the first leg, in May, 2000, it went in for a buy back of 2 lakh shares at a price not exceeding Rs 4,200 per share.
In the next leg in January, 2001, it went in for an additional buy back of a further 2 lakh shares for a price not exceeding Rs 4,000 per share. For the first two buy backs, the total outgo was Rs 160 crore.
After the two buy backs, Robert Bosch's stake increased to 56.99 per cent from 51 per cent. Financial institutions, banks and insurance companies have 27.43 per cent, foreign institutional investors 2.97 per cent and others have 12.61 per cent.