The Hindu Business Line : Auto component companies on expansion mode, to invest $1 b

BOLSTERED by growing overseas and domestic demand, auto components manufacturers are revving up their investments, with plans to invest about $1 billion (Rs 4,355 crore) on capacity expansion in the current year.

"At the moment, the auto components industry is investing roughly $1 billion per annum. This is on the back of a 30 per cent turnover growth witnessed over the last couple of years. We expect the rate of growth in investments to be around 10-15 per cent in the coming years," Mr Deep Kapuria, President, Automotive Component Manufacturers' Association said.

Even as foreign auto component majors like Mico have announced plans for a Rs 1,000-crore investment in the country, most domestic auto component companies are on an expansion mode, with majors such as Bharat Forge, Amtek Auto, Sona Koyo, Rico Auto, Goetze and Omax Autos charting extensive expansion plans.

"The fundamentals of the market are strong. India had in the last year seen the fastest increase in growth in passenger car production. And it is close to finding a place in the world's top 10 automobile producing countries, with several major automobile players (including Suzuki and Hyundai) announcing major investments in creating capacity. A step-up in auto components exports will be driven by global players who have production facilities in India," an automobile analyst pointed out.

In fact, several American and European vehicle manufacturers have revealed plans of stepping up on sourcing components from India. For instance, General Motors intends to source components worth $1 billion in the next 3-4 years up from the current $120 million (Rs 523 crore).

Auto component exports were estimated at $1.4 billion last year. "India exported much more than $1.4 billion if embedded components in the CBU (completely built units) exports are included.

"My estimate is that the actual export would be roughly $2.5 billion. Exports have been growing roughly at 30 per cent and despite a slow down in the global economy, we expect long-term growth to continue," Mr Kapuria said.

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