The Hindu Business Line : Magna’s Indian arm scouting for partners for two group companies

New Delhi, Feb. 10 After three joint ventures in the auto component space, Magna International’s Indian subsidiary is scouting for domestic partners for its two auto parts group companies.

“We plan to introduce Magna Closures and our interior-exterior and plastic group companies.

“While Magna Closure, the business unit for door modules, window assembly is expected to start operations this year or the next, we are yet to decide on the time frame for the automotive plastic business,” said Mr Prasen Agali, Executive Director, Magna International Inc-India.

The Canada-based automobile contract manufacturer with 10 component subsidiaries worldwide, has total sales of around $24.2 billion and employs over 83,000 people.

It is looking to increase its sourcing from India by more than two fold. The company sourced $20 million in the last calendar year and is looking to source $80 million from the domestic market for its global operations, said Mr Agali.

Indian ventures

At present, Magna has joint ventures with Lumax for automotive mirrors, with Amtek Auto for its powertrain systems and Rico Auto to produce oil and water pumps for automotive engine applications for India and the European market.

Commercially, Magna’s component sale is fetching higher revenues to the company as compared to its vehicle engineering business.

But, according to Mr Agali, the company expects its development centres in Bangalore and Pune to expand as more global car manufacturers are looking to shift their global engineering development to India.

Outsourcing

“Car manufacturers have already began outsourcing their component design engineering services to the vendors. As global companies will launch more models in lesser time, the next trend that will emerge is the outsourcing of entire vehicle engineering.

“With this, we expect our domestic business to expand from the current 5-10 OEMs that we are servicing,” he said.

However, it may take beyond 2010 for the company to start contract manufacturing in India.

“We would first establish ourselves on providing complete vehicle engineering services to our customers in India and only then we would look at contract manufacturing in India,” added Mr Agali.

More Stories on : Outlook | Automobile Components

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