The Hindu Business Line : Nano issue adds to woes of auto component makers

New Delhi, Sept. 29 Domestic autoparts suppliers banking on volumes from the production of the Nano to mitigate the impact of the slowdown in the domestic and global auto industry, say that their orders would continue to be under pressure during the year.

Suppliers say that the orders would be delayed by at least two-three months considering that Nano volumes may take a longer time to take off and due to capacity constraints in the backdrop of the Singur controversy. The volumes is expected to be around 50 per cent lower than anticipated.

“This year, launches are getting delayed. With Nano volumes also likely to take a longer time to take off, our business could be impacted by 10 per cent this year,” said one of the suppliers for the Nano project.

Volume delay

Minda industries which makes diversified auto components, also says that while launches would be on time, there could be some delay in its volumes. “Margins are under pressure. It may take 2-3 months more before volumes pick up,” says Mr N.K. Minda, Chairman, Minda Industries Ltd.

According to Amtek Auto, the macro economic scenario is such that domestic and global auto makers would wait for a more strategic time to launch their models so that they can reap the maximum benefit.

“With steel prices softening, pressure on margins could ease. But all calculations are going wrong for most suppliers. In the overseas market too, with car sales at an all-time low, foreign companies are deliberately delaying new launches to ensure that the situation has cooled off before they pan out their plans,” said Mr Santosh Singhi, Chief Financial Officer, Amtek Auto.

Estimating biz

In case of Rico Auto, which has its business almost equally divided between two wheelers and four wheelers, it would prefer to wait and watch till the next month before it estimates its business outlook for the year.

“The market is tight. We will wait till mid October to see what the order book for this year looks like. Currently, with 40-45 per cent of our business being in two wheelers and exports comprising smaller capacity engines, we are so far ok,” said Mr Arvind Kapur, Managing Director, Rico Auto.