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Despite a slowdown in the automotive industry, the entry of new players like Ford and Maruti Suzuki in Gujarat has encouraged the component manufacturers in the state who expect things to look up in the second half of the fiscal. Buoyed by the growing reputation of Gujarat as the next big automobile hub in the country, the Automotive Component Manufacturers Association (ACMA) too has set up an office in the city, and is looking at attracting more members from the state.
Component makers in Rajkot claim that they had suffered around 30 per cent erosion in business volumes last year and hoped to make up for the losses during this fiscal. Himanshu Nandasana, managing director, Bhavani Industries which makes transmission components said, "We are expecting things to start looking up in the next six months. The entry of big players like Maruti Suzuki and Ford have definitely boosted the confidence of component makers in the state." He added that Rajkot based component makers had suffered an overall business loss of around 30-35 per cent during 2012-13, and this year expected business to pick up by that much.
Rajkot, a major auto-component hub in Gujarat, has over 500 component making units which employs over 10,000 people. Of these, around 50 bigger units supply directly to the original equipment makers (OEMs). Industry sources claim that despite the slowdown in the automotive industry, around 50-75 new units have come up in the area.
Component makers are, however, cautious about their expansion plans. As Nandasana puts it, "We do not have any expansion plans for this fiscal.We plan to move cautiously."
A similar sentiment was echoed by Suresh Santoki, managing director of Amul Industries, another component manufacturer in the area, "Market sentiments are still weak. And while one is buoyed by the entry of major car makers in the state, small and medium units will tread cautiously while deciding on capex and recruitments."
Many are waiting for the monsoons to give a better indication as to how the remaining part of the fiscal would shape up. A good monsoon would ensure better commercial vehicle and farm equipment sales, in turn, helping the components industry.
ACMA too is hopeful of drawing more members from Gujarat. It has recently opened an office in the city and currently has around 30 members from the state. These companies are mainly supplying to Sanand and Halol belts. "More companies are eying to come into the state as Ford and Maruti are coming up with plants. In order to service the growing number of members in the state, we are setting up an office in Ahmedabad," said Ashwani Jotshi, senior director and regional secretary, ACMA western region.
So far, the component manufacturers who are ACMA members were serviced from the associations Bombay office. The industry body plans to take the member-count from the region up to 140 companies from Gujarat in the next few years. It has around 214 members in the entire western region at the moment.
As a part of its ongoing initiatives, ACMA is also organising a buyer-seller meet for tier-I and tier-II suppliers from the region in September. Jotshi said, "While there is indeed a slowdown in the industry at the moment, once the new plants (Ford and Maruti) become operational, the order flow to tier-II and tier-III suppliers is slated to increase manifold."
