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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.
