Companies in the process of increasing production capacity
Rajkot auto components industry, which has about 70 per cent share in the Indian auto parts industry, seems to be on an expansion mode buoyed by more than anticipated demand. Rajkot, which has about 1000 small and medium units, is witnessing an increase in their production capacity to cater to the huge demand this year.
As per industry sources, the orders have increased by 35-40 percent this year and to fulfill the requirement, companies are investing in capacity expansions.
“Expansion is a must for the auto industry at this time as the demands are very high and it poses a great opportunity for us. The industry may attract about Rs 1000 crore investments during the next two years, especially from the medium scale units,” said RK Jain, President, Vikram Valves Company, which manufactures high technology valves for automotives, generator sets, stationary and marine engines.
The company is planning to join hands with an American auto company in the near future. “We are in the process of tying up with an American company and will invest Rs 25 crore for expansion this year,” Jain added.
Rajkot has about 50 original equipment manufacturer (OEM) suppliers in auto components and the total turnover of these units is about Rs 800-1000 crore per year. An overall turnover of the industry is about Rs 4000-4500 crore every year.
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City-based Amul Industries, which is a leading supplier for Tata Nano cars, has already invested Rs 10 crore for expansion this year. The company is building up a unit near Nano factory at Sanand.
“As the growth of auto industry is seeing an uphill, the demand for parts is also increasing and good monsoon supports the growth. The orders have increased by 35-40 per cent this year. Medium size companies are considering an expansion during this time and some of them have already started the process. It will continue for next two years,” said Suresh Santoki, Managing Director of Amul Industries.
Similarly, Bhavnagar-based auto parts manufacturing company Microsigh Products is planning to invest Rs 50 lakh on technology up-gradation in its unit. The company supplies more than 200 parts to all major auto companies in India. After this investment, the company’s turnover will be Rs 5 crore from present Rs 3 crore.
“The recent boost in the auto components industry will add more than 15-20 percent in the growth in the industry and in overall Rajkot engineering industry,” said Bharat Davda of TERI.