The Hindu Business Line : Suprajit Engg setting up plant in China; eyeing buys in Europe

Bangalore, Sept. 17 Suprajit Engineering, which has bagged an order to supply auto parts to Tata’s Rs 1 lakh car, plans to set up a factory in China and is eyeing acquisitions in Europe.

“We want to be among the top five cable makers globally in 5-7 years,” Suprajit Engineering’s Managing Director, Mr K. Ajith Kumar Rai, told Business Line. Suprajit is a Rs 200-crore company currently. The market size for mechanical cables globally is around $2 billion and those among the top five worldwide have turnover above $200 million.

Suprajit, which manufactures mechanical automotive cables in the country is setting up a plant in Singur to supply parking brakes, clutches, boot release cables and choke cables for the Tata’s Rs 1 lakh car which is expected to hit the market late next year. The order from the Tatas is worth around Rs 40 crore, sources said.

ERP solution

Suprajit also recently went in for an Oracle-based ERP solution for its company which was implemented by the Bangalore-based Sonata Information Technology. “We have been able to reduce costs as well negotiate better contracts because of the ERP solution,” Mr Rai said.

Mr Rai said his company has a multiple strategy to spread its network globally which will allow it to supply parts to auto companies in any part of the world from the nearest site. This entails setting up new plants, entering into joint venture as well as acquiring companies. In China, it has signed an MoU with a local company to set up a joint venture there. Suprajit, which currently has a purchasing office in China, will own 70 per cent in the new venture.

Indonesian plans

In Indonesia, Suprajit is planning to set up a plant to cater to its clients such as Bajaj Auto and TVS who already have factories there. It is planning to acquire a company in Europe which makes parts for golf carts and other non-auto products, while it has a marketing partner based out of Detroit in the US to bid for contracts from car makers there.

In South Korea, it has entered into an agreement with Michan Cables for bidding jointly for contracts for customers who have base in India as well as in South Korea. It recently bagged an order from General Motors to supply parts for its plants in India as well as in South Korea. “We supply parts at one-third of the prices in the international market and hence will continue to remain competitive,” he said.

Mr Rai said by 2009, about 60 per cent of revenues will be from the passenger car segment and the rest from two-wheeler companies. At present, over 55 per cent of the revenues are from the two-wheeler sector and the rest from the passenger car sector. Suprajit expects 40 per cent of its revenues from exports by 2009 from the current level of 25 per cent.

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