Auto parts makers open up Rs 5000 crore investment to meet rising demand
A key supplier to Maruti Suzuki, JBM Group plans to invest Rs 1,000 crore over four years for capacity expansion and new businesses.
Companies like Lumax, Varroc, JBM Group, C K Birla Group amongst others have lined up fresh investment to the tune of over RS 5,000 crore (See table.) A significant part of this is getting into fresh capacities and large part to be ready for the new regulations on safety and emission.
Nishant Arya, executive director, JBM Group said the company has brought forward by 6 months expediting investments in a couple of new facilities.
A key supplier to Maruti Suzuki, JBM Group plans to invest Rs 1,000 crore over four years for capacity expansion and new businesses. Aurangabad-based Varroc Group plans to invest over Rs 600 crore per annum in the same period to build scale and invest in emission technology and new generation lighting systems. The C K Birla-owned NBC Bearing will be inves Rs 750 crore, part of which will going into its new plant in Savli, Gujarat.
“The sentiment is positive, with a good monsoon, we expect a strong festive season. The overall mood is upbeat and we are fast tracking some of our investment in new plants,“ added Arya.
Led by low interest rates, falling fuel prices and new models, the automobile industry has posted a growth of 13.4% in April to July of FY17 and two wheelers and light commercial vehicles have started seeing strong traction in the market. Sales of passenger vehicles are inching closer to double digit growth.
Arvind Balaji, joint managing director, Lucas TVS and president of ACMA, said companies are investing and they are not only investing in capacity but also in capability building to meet new regulations and to reach global size and scale.
“Once we get to the level, then India is on par with the world and then India has a potential to become global manufacturing hub for global vehicles and platforms not just India projects. So you have lot more advantages,“ added Balaji.
The Automotive Mission plan envisages the component industry size to grow five times to $200 billion and capex estimated is about $50 billion over the next 10 years.The companies will also have to invest in upgrading plants and in people.
Indian Automotive market is graduating to better safety standards starting 2017 and BS VI emission norms by 2020, which will call for hurried activity on capability building. But capacity to meet the growing requirement is the key.