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Auto components manufacturer Rane has drawn up a Rs 230-crore investment plan for this year. But it will watch the first two quarters closely before taking a final call on this.
Last year, the Rane Group had planned a capex of Rs 240 crore. But the slowdown in the auto industry, strike in Maruti, tight credit and moving interest rates had forced the company to cut down investments to Rs 200 crore.
Rane is approaching this year with cautious optimism, on the back of “reasonably bullish” indications from customers. Barring tractors, which have seen a slowdown, passenger cars and commercial vehicles have had a good start. “But the industry is still vulnerable to environmental and governance issues. The power deficit is quite scary. Growth potential is there but things can easily go wrong,” says Mr L. Ganesh, Chairman.
“We will watch the first two quarters closely and manage our fixed cost and capital expenditure plan.”
Chunk of investments will go into capacity addition across various plants.
Mysore plant
The group also plans to focus on R&D. “Usually less than one per cent goes into R&D, testing and design. This year, we plan to increase it.”
In the last couple of years, Rane (Madras) – a unit of the Rane Group – has been developing and testing hydraulic power steering for tractors and hydraulic cylinders for commercial vehicles at its Mysore plant.
“We have been seeding the products with Ashok Leyland, Volvo, Tafe and Mahindra & Mahindra. We have done some exports too.”
The hydraulics business is now ready to scale up, says Mr Ganesh. Rane (Madras) is setting up a separate facility within the Mysore plant for this.
With large tractors moving from manual to power steering and export tractors increasingly looking at power steering, there is great potential for hydraulics, says Mr Ganesh. “This year we expect Rs 100 crore from hydraulics – from Rs 25 crore now.”
On exports, Mr Ganesh says the US is doing “surprisingly well. Though the market is not at its peak, it has come back well.”
The slowdown in Germany – which makes a large part of European exports – is a cause for concern, but things are not “so alarming”.
The Rs 2,500-crore group hopes to grow 15-20 per cent this year.
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