Auto part firms ramp up output to meet demand

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Aug 28 2010, 08:06am hrs
Auto component manufacturers are scurrying to meet the rising demand from automakers by significantly ramping up production across product portfolios. At least 10 vendors across the country are looking to make fresh investments in either enhancing capacities or setting up new facilities in the next 2-3 years estimated to be more than Rs 1,500 crore. Re-negotiating contract prices which was inconceivable at the peak of the recession is also back in the fray.

Contract prices have gone up anywhere from 3-5% in the last few months. Managing director of Gurgaon-based auto component maker Omax Autos Jatender Mehta said that earlier OEMs were reluctant to increase prices of contracts however the business environment had changed drastically in the last 7-8 months. None of us were prepared for such a surge in demand...we have raised contracts prices by up to 5%, Mehta said.

President of the Auto Component Manufacturers Association (ACMA) Jayant Davar said, Component makers are re-negotiating contracts which is important for them to increase production to keep supply in line with demand. However the percentage rise in contract prices vary, he said. Davar said that the demand-supply mismatch of key components could also be plugged soon. He did not give a timeline for it.

Davar who is the managing director of Sandhar Technologies is going to invest up to Rs 123 crore this fiscal year, a jump of over 40% from the previous fiscal year when the company had invested Rs 86 crore. Sandhar is among the largest suppliers of locks, mirrors and door handles to OEMs. Surinder Kapur led Sona Group will also be investing 80 crore to keep supply of its key components in line with the demand.

Lumax Industries that supplies components to the likes of the Tata Motors and Maruti Suzuki has also earmarked an investment of Rs 200 crore in the next 2-3 years.

The companys senior executive director Anmol Jain said, Going forward, we will be putting up two plants, one for Nano in Sanand, which should be operational by the third quarter this fiscal and second for Etios in Bangalore, which should come up by next fiscal.