The $6.2 billion Federal-Mogul plans to make India a key base for its automotive business in South-East Asia.

The company already has six plants in the country with the seventh scheduled to be commissioned in Chennai this December. This facility will produce eco-friendly brake friction materials for the original equipment (OE) and aftermarket segments.

In a recent presentation to Indian journalists at its US headquarters in Southfield, Michigan, Federal-Mogul officials said India was important from the viewpoint of issues relating to fuel emissions and safety, and also due to its inherent advantage as an export base for small cars.

The other opportunity arises from global car makers bringing their latest products to India. Likewise, home-grown companies like Tata Motors and Mahindra & Mahindra are looking overseas and will need top technologies to hold their own in a competitive arena. It is here that Federal-Mogul, which supplies powertrain and vehicle safety solutions, sees itself play a critical role.

The company is equally bullish on growth prospects in India's two-wheeler sector which accounts for 25 per cent of its end-user base. The Big 4 — Hero Honda, Honda Motorcycle & Scooter India, Bajaj Auto and TVS Motor — are already doing over 1.2 million units each month.

Exports are a key part of this growth with companies like Bajaj already despatching a third of their output to global markets. It is also a matter of time before free trade agreements become inevitable in the Asean region and this will be good news to Federal-Mogul.

Interestingly, ‘best cost countries' (which includes India) have seen their share in the company's manufacturing capacities grow from 10 per cent in 2004 to 30 per cent in 2010. During this time, Europe's was down from 50 per cent to 40 per cent with the US/Canada combine falling from 40 per cent to 30 per cent. Between 2005 and 2010, Federal-Mogul closed 33 sites in the Americas and EMEA (Europe, Middle-East and Africa) while opening 12 new ones in Brazil, Russia, India and China.

For the next five years ending 2015, the company sees tremendous prospects in the BRIC economies where the average growth is around 10 per cent. This is in stark contrast to the US and parts of Europe which continue to be shaky.

Federal-Mogul's India facilities are spread across Bangalore, Bhiwadi, Patiala, Parwanoo and Rudrapur where it makes a slew of products ranging from pistons, rings and valve seats to ignition and engine bearings. Going forward, the company plans ‘unique' pistons for bikes, spark plugs for CNG engines and asbestos-free friction materials for brakes.

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