Auto spares firms gearing up for a long drive

The industry has lined up Rs 3,000 crore for capacity expansion

The domestic auto component industry, as it gears up to target exports of $20-25 billion by 2014-15, has lined up an investment of Rs 3,000 crore for capacity expansion.

What's more? Its not just the big names that are loosening their purse strings but even mid-sized and small players are ramping up assembly lines so they don't miss out this big boom in the component industry.

Major investments on the anvil include the proposed Rs 1,000 crore investment by Bosch, Rs 350 crore by Bharat Forge, Rs 200 crore by Goetze India, Rs 125 crore by Sona Koyo Steering Systems and a significant investment by Omax Auto.

Smaller players are also in a overdrive, for example among the TVS group companies"" Brakes India plans to invest upwards of Rs 100 crore, Lucas-TVS is considering setting up a plant in Iran for making starters and alternators, Axles India putting up a Rs 16 crore plant that will supply axle housings to Dana Corporation of the US, Wheels India plans to invest Rs 85 crore to increase capacity at its three plants and the Madurai unit of Sundram Fasteners has plans to expand capacity.

Phoenix lamps has set aside Rs 15-20 crore every year for ramping up capacities. Sakthi auto components will be working on increasing capacities at it foundry unit, while Minda Huf is setting up a new plant in Pune.

Rs 3000 crore investment may be substantially more than that in the previous years, but according to the Automotive Component Manufacturers Association (ACMA) the industry has a long way to go if it wants to become a major global player.

As per a September 2004 Mckinsey report, if India's component exports have to scale the $ 20-25 billion mark by 2014-15 then the industry will have to spend anything close to $1.5 billion a year on capacity expansion and product development.

Most of the investment this year is coming from manufacturers, which have topped their capacities but Deep Kapuria, president of ACMA, says the next few years will see a lot more action in terms of greenfield projects undertaken by various multinational component makers which are still sizing up the market and the country's export potential.

Already Lord Swaraj Paul's Caparo group has announced plans to set up a Rs 200-crore automobile parts manufacturing plant at Bhiwadi industrial area in Alwar district of Rajasthan.