New product mix, capex to drive Mico

Updated: Jan 2 2006, 05:30am hrs
Motor Industries Company Ltd (Mico), founded in 1951, is a subsidiary of Robert Bosch GmbH , Germany (that holds 60.6% stake in Mico). The company derives 92% of its total sales from sales of automotive products with the balance coming from industrial equipment, gear pumps for tractor applications, electric power tools, packaging machines, security technology products and Blaupunkt car multimedia systems. With access to international technology of Bosch, Mico is the largest manufacturer of diesel fuel injection equipment in the country. Further, the company is a preferred vendor to major OEMs in CVs, UVs, tractors and two-wheeler segments. The company has four manufacturing units in India with two located at Bangalore (Karnataka) and one each at Jaipur (Rajasthan) and Nashik (Maharashtra).

Acquisition of petrol injection systems business (consisting of system application, development and manufacture of electronic control units as well as trading in components such as electronic control units, fuel filters, fuel pumps, temperature sensors, pressure sensors, valves etc) since January 2005 from Robert Bosch India Ltd allowed Mico to expand its product portfolio.

In calendar 2004, exports (accounting for 17% of the total sales of Mico) increased by 22.6% over the corresponding year. Successful transfer of product lines from other plants of Bosch to Mico has played a key role in driving exports. In 2004, production for a range of nozzles was successfully transferred from the Robert Bosch plant in Bursa Turkey to Mico's Nashik plant. On the strengths of quality and high productivity, Mico has emerged as a partner in international production network of Bosch.

Despite the strong growth in exports, the company continues to be dependent upon domestic market for growth and profitability. The company also faces business risks arising from the cyclical pressures in the automotive industry, especially CVs. Changes in product mix comprising increase in distributor pumps and the planned capex are the key factors that may have implications on company's financial performance in the short to medium term.

Nevertheless, strong support from Bosch and access to parents technology, dominant position in spark plugs and diesel fuel injection market in India and the company's plans to export to group companies of Bosch augur well for the company.