The Hindu Business Line : Auto parts sourcing revving up

OVERSEAS buyers of Indian automotive components are stepping up their purchases. Several buyers have expressed satisfaction over Indian products and are in the process of expanding their source-base here.

A noteworthy feature of the outsourcing phenomenon is that a number of small auto components companies are getting international attention.

US-based Tenneco Automotive, which intends to buy $130 million worth of auto components from `low-cost countries', proposes to step up sourcing from India.

Last year, Tenneco bought $35 million (Rs 160 crore) from India. Mr Jignesh V. Raval, Director, Product Sourcing, Tenneco Automotive, is confident that the current year's purchases will be $60 million (Rs 275 crore).

Echjay Industries of Rajkot has got a $4-million (about Rs 20 crore) order from Tenneco, for a range of forgings, Mr Raval told Business Line.

Mr Raval said that a number of other companies had been give trial orders. An example is that of the Gurgaon-based Automax, part of the Omax Auto group. If the company is found to be okay, "we are looking at Rs 50 crore in 2006." Another example is that of Asahi International of Mumbai, which has received a Rs 17-crore order. Purchases from this company could grow by 20-30 per cent a year, Mr Raval said.

Another evidence of growing international interest in purchasing from India is the experience of autopartsasia.com, a company that was started in the dotcom era for matching buyers and vendors of auto components.

In the last four years since inception, Autopartsasia facilitated exports of components worth some Rs 100 crore from India, of which Rs 40 crore was done last year alone.

"This year we are confident of doubling that number," said Mr K. Vaidynathan, Director and CEO, Autopartsasia.

Autopartsasia represents buyers' interests in India — it gets paid by the overseas buyers and not by vendors in India. The company has midwifed business deals between some 200 Indian vendors and 200 overseas buyers. Of the buyers, about 20 have become regular buyers from India. A prestigious name in this list is Valeo of France, which signed up with Autopartsasia a few months ago for sourcing components worth $1.5 million in 2005.

According to Mr Vaidyanathan, the business with these regular buyers is deepening. Autopartsasia is being engaged to do a lot more than identifying suppliers — it is being asked to validate the products, do pre-despatch inspection and sometimes even collect a variety of components and pack them into kits.

Some of the other buyers are US-based aftermarket parts suppliers, Reliance Auto, Buckner and Waterman, Carrab of Sweden and Hong Seng of Malaysia. India Pistons, Bimetal Bearings, Kar Mobiles and Sankar Sealings are among the 50-odd Indian companies that sell regularly through Autopartsasia.

Deutz of Germany, a leading diesel engine manufacturer, has also stepped up its purchases from India. In the current year, Deutz expects to buy components worth about euro 30 million (about Rs 170 crore), but Mr Alexander Count of Matsuchka-Greiffenclau, Senior Vice President-Operations, is confident that in 2005, the company will buy at least for euro 50 million (Rs 300 crore).

In 2003-04, India exported automotive components worth a billion dollars (Rs 4,500 crore), a year ahead of the target for that figure.

More Stories on : Automobile Components | Outsourcing

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Rules on FRBM Act bind Govt to bring down fiscal deficit

India ranked fifth in MasterCard consumer confidence survey

Even one buyer makes a market

Oil companies asked to undertake kerosene delivery

Petrol, diesel price band mooted

Another round of finished steel price hike likely

Will Railway Budget tread the reforms track?

Auto parts sourcing revving up

Govt plans to disinvest 5.25 pc stake in NTPC — To ride piggyback on IPO

Minorities body to get more funds

Harsud — a town waiting to be submerged

Input-output norms for 59 export items announced