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Monday, Jun 18, 2007
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Business Daily from THE HINDU group of publications Monday, Jun 18, 2007 ePaper |
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Automobiles Corporate - Overseas Investments Industry & Economy - Automobile Components Component makers set to follow auto majors into overseas markets Priyanka Vyas
Looking abroad Bajaj Auto plans to help its component suppliers to set up base in Indonesia and later in Brazil. TVS Motor also plans to take its suppliers to Indonesia. Tata Motors has similar plans for the Thailand market.
New Delhi June 17 The entry of Bajaj Auto Ltd (BAL), TVS Motors and Tata Motors into the South-East Asian market will pave the way for a plethora of Indian auto component vendors to set up base in the region. BAL is gearing up to create an ecosystem for its suppliers by helping them set up base at its manufacturing facility in Indonesia. Similarly, TVS Motors expects some of its suppliers to leverage the company's presence there and establish their units. "At our Pantnagar plant, we have created a hub for all our suppliers. We will replicate this model as we expand our manufacturing facilities in other geographies," said Mr Sanjiv Bajaj, Executive Director of BAL. "As volumes reach a certain scale at our Indonesia facility, we plan to take the 16 suppliers we have at our Pantnagar plant to the country, within two years," he added. "Similarly, as we set up a base in Brazil and expand to cater to the South American market in the coming years, we intend to take our suppliers there." He also said that though suppliers change from time to time, in all probability the company would take its current suppliers there. The company started operations at the Indonesian plant in March last year. "In October, we will start the first phase of localisation. Till the volumes reach a critical scale, we will import certain parts from India, make some of them within the factory and also work with the local suppliers there," said Mr Bajaj. TVS Motors, which has set up a plant in Indonesia, is seeking to establish a network of suppliers in the region by sourcing from local suppliers as well as from Indian vendors. "We may not take the responsibility for our suppliers," said a senior company official. "But we anticipate that many of our suppliers will set up base following our presence there. It would not only be an opportunity for them to serve us but also to cater to other vehicle manufacturers in these markets." According to a major vendor that supplies to both BAL and Tata Motors, BAL has already started discussions with suppliers and Tata Motors will take 30-35 of its key suppliers to Thailand by the year-end or the beginning of next year, at the latest. "Till now, foreign players who entered the Indian market brought along with them their component suppliers as joint venture partners or in certain cases, they set up wholly owned subsidiaries," said Mr Vishnu Mathur, President of ACMA. "For instance, when Suzuki came here, it brought with it Japanese component suppliers that partnered with Indian suppliers like Sona Koyo. Similarly, with Hyundai setting up a facility here, some 19 South Korean component vendors set up operations mainly through joint ventures with Indian component makers." He added: "However, this is a reverse flow. Now, Indian component companies would be able to foray into these markets."
Related Stories: More Stories on : Automobiles | Overseas Investments | Automobile Components
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