The Hindu Business Line : Auto component cos turn to product engg, design

New Delhi, Sept. 23 With India increasingly becoming a hub for global car makers, companies are looking to enhance their component engineering and designing capabilities to increase their share in the automotive knowledge-based business.

As engineering skills of component vendors enable vehicle manufacturers to save costs, the profitability gets shared allowing for better margins for component makers.

Hence, by expanding to higher levels of engineering component makers would be poised to tap more Original Equipment Manufacturers (OEM), increase revenues and become major players in the segment.

Mahindra Systems & Automotive Technologies (MSAT), for instance, is planning to increase its base of engineers in product engineering and development by three times in the next three years.

“At present we have 200 engineers of the total 1,100-1,200 employees. We expect the number to touch 1,000 by the most conservative estimates in the coming three years,” said Mr Hemant Luthra, President, MSAT.

Currently 25 per cent of the company’s revenues are accrued from its parent company Mahindra, and the remaining from other OEMs.

Similarly, Tata Autocomp Systems Ltd (TASL) also plans to set up engineering centres across different locations to support the needs of global car makers.

“Our current headcount is around 1,200 for providing engineering services. This is likely to grow to 4,000 in the coming three to five years,” said Mr Hemant Mohgaonkar, Executive Vice-President, Engineering and Technology, TASL.

While the company has one such centre in Japan, it is setting up another in China by the year-end.

Bharat Forge too is eyeing a substantial chunk of the same space.

“We are working along with our OEMs on co-designing and developing for future car models that will be launched on a global platform.

“Currently, 20-25 per cent of our products in value terms use in-house intellectual inputs. We certainly see this going up,” said Mr Amit Kalyani, Managing Director, Bharat Forge.

Companies like Amtek, Lumax, Minda and Sona Koyo also see this as a means to achieve higher profitability.

"Based on the value-added engineering that we do, vehicle manufacturers are able to save costs, share profits, thereby increasing our margins," explained Mr N.K. Minda, Chairman and Managing Director of N K Minda Group. The Chairman and Managing Director of Sona Group, Mr Surinder Kapur, attributed the increased opportunities in the space to the excitement following Tata's one-lakh car and the plans of other car makers like Nissan and Toyota. In fact, Nissan's recent announcement of setting up a design centre in Chennai could very well give a fillip to component makers expanding on this front.

Related Stories:
Hyundai plans overseas component supply from India
Fiat keen to source auto components from India

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