India Manufacturing Talk

News and Views on Manufacturing in India

Government Plan for Auto Component Manufacturers

In what is perhaps the only whiff of this, The Financial Express ran this article on September 4th which I had completely missed out on.   What was interestingly pointed out was that the government was working out a scheme to help auto component manufacturers who largely come from the SME segment.  Some excerpts from the article had some very encouraging remarks from the Heavy Industries and Public Enterprises Minister, Villasrao Deshmukh at the ACMA Annual Conference;

My ministry is examining the feasibility of having a separate scheme that can facilitate financing to the sector, as most small and medium auto component enterprises rarely have the means to raise the required resources on their own


Fiat India – 85% Localisation of Grande Punto

In a recent press release Fiat India announced that they are targeting 85% localisation of parts for their Grande Punto model by 2009.  Currently the Fiat claims to have achieved localisation of 60%.   The 85% target would give Fiat room to leverage prices to aggressively sell the Punto.  The Grande Punto is currently priced between Rs 3.99 lakh – Rs 6.11 lakh.

With the high import duty costs localisation is a priority for most car manufacturers given the manufacturing infrastructure available in India.  Fiat India plans to manufacture the Punto at their Ranjangaon plant near Pune.  The production of the Punto would no doubt help develop local manufacturing with 70,000 cars planned for 2010 and 2 lakh cars planned for 2016.


Renault Nissan Oragadam Plans on track

In the wake of the recent news that Mahindra & Mahindra would no longer be part of the Renault Nissan venture at Oragadam, local industry received reassuring news when Nissan confirmed that plans for the Oragadam plant were on track.  The plant which is spread over 640 acres is scheduled to be completed in May 2010.   However in view of the global recession Renault’s plans for a manufacturing line at the facility has been suspended for the moment.

Citing a drop in global demand for cars from 68 million cars in 2007 to 54 million in 2008, Colin Dodge, Executive Vice-President, Nissan Motor Company, Renault’s decision to ‘suspend’ its plan for a production line at the upcoming facility should be read in this context.  “Renault is very much there in the venture. They will come back to have their production line,” he said.  The Oragadam venture would have flexibility to make products on three platforms — A segment cars, B segment products and light commercial vehicles.


GM India: An Optimistic Outlook

In the midst of news of GM filing for bankruptcy earlier this week it was reassuring to see that GM India was cast as part of the new “good GM” and seen as a separate entity from its ailing parent.  This is good news for those in the GM India supply chain.  GM India for its part has to secure funds on its own since the bankruptcy.

The company has plans to raise $200 million for a new engine factory and another chuck of change for a powertrain plant among other things.  The company is confident of raising the money according to Nick Reilly, President of GM Asia Pacific.    GM also has plans to roll out five new models in the next two years.   GMI is planning to launch two cars in the Spark segment to tap into the compact car segment which is the domain of Maruti (WagonR and Ritz) and Hyundai (Santro).  GMI also has plans for a sedan (Cruze) based on the Optra platform.   The Tavera is also slated for an update.  The company also has plans to tap into the CNG and LPG alternative fuel vehicle market.


Opportunities for Manufacturing Still Abound

The global recession has all but wiped out the exuberance of the manufacturing industries.  Nothing new to report here.  News all over the web and print medias focus endlessly on the agony being faced by the common man these days but the fact is that the manufacturing industries have been reeling long before.   Spiraling interest rates, the strong/weak dollar rates and the oil price crisis all started a slow down process that was effectively finished off by the global economic meltdown.

Companies all over seem to be floating a figure anywhere between 30% – 50%  reduction in order intakes and corresponding metrics.   The industries worst hit by the recession are the automobile industries and their ancillaries.  This has resulted in a snowball effect that directly affected all verticals that act as suppliers to the industry – iron & steel, transport, raw materials,  etc.   Most plants were effectively closed for months of November and December with some activity reviving in January.


Visionary Leaders for Manufacturing

A recent press release from the Confederation of Indian Industries (CII) announced the launch of a pilot programme – designed under the CII Mission for Manufacturing Innovation – to develop Visionary Leadership in the SME segment.  Citing figures of 14% growth in the Indian manufacturing industry and the need to sustain this growth, the report states that Indian manufacturing needs transformation through policy changes, infrastructure development and a strong thrust on building competitiveness.  An important aspect of developing competitiveness is the development of a set of Visionary Leaders capabale of Innovation and Breakthrough Thinking that will result in future concepts and products and in the process transform the Indian Manufacturing Industry.

The Visionary Leaders for Manufacturing (VLFM) Programme as it is called is focused on meeting this requirement by developing at least 200-250 Visionary Leaders in India in the next two years. It is designed to be the most advanced and innovative management education system especially devised for creating the future leadership. The VLFM is a national programme to develop Leaders in Manufacturing under the Indo-Japan Cooperation Agreement 2006, signed by the Prime Ministers of India and Japan. It is a partnership between the Indian Industry, Academia, the Indian and the Japanese Government. The collaborating institutions include:


Engineering Services & Manufacturing Prospects

The long term prospects of manufacturing in India look bright in spite of the recent setbacks suffered due to the increase in oil and steel prices. Manufacturing industries have taken a hit in the recent months with thinning margins thanks to the rising cost of inputs. Interest rates tapered demand in the price sensitive domestic automobile and two wheeler industries. Relief seems to be in sight for those flexible enough to exploit the potential of overseas markets.

According to a Frost & Sullivan report in the Financial Express, global original equipment manufacturers (OEMs) are looking at India as a low cost source for their manufacturing;


Rising Prices of Inputs Hamper Auto Component Manufacturing

The India manufacturing slump story has been in the news over the past few months as rising interest rates and fuel prices hit the auto industry making life difficult for auto majors and their suppliers. The auto component industry has been hit with rising steel costs, along with the deprecating dollar. Industry news reported negative growth in December 2007 with component manufacturers unable to pass on the burden to their customers who typically were willing to take on only a partial burden.

ACMA was among the more vocal players on asking for intervention by the government to curb rising prices. According to ACMA President Sanjay Labroo, the component industry risked losing share both in domestic and international markets unless the government intervenes to control rising steel prices.


Interest Rates Torpedo Two Wheeler Mfg

India’s two wheeler industry consisting of the motor cycle, scooter and “scooterette” segments has been hit by the rise in interest rates as sales have plummeted in the last few months. Sales figures of Bajaj Auto and TVS slid against market leader Hero Honda which as a result of this downturn widened it’s gap with Bajaj Auto – its nearest competitor – by little over one lakh units per month. (One Lakh = 100,000)

Bucking the trend Hero Honda sales went up 4.31% for September 2007 with sales of 314,537 units against 301,577 units sold last year. In contrast Bajaj Auto’s sales slid by 23% in September – selling 232,496 units against 300,141 last year. TVS sales fell 29% against last year – selling 115,091 units.


When State Govts boost Manufacturing Support

When it comes to support for manufacturing in the auto sector few governments in the past could upstage Maharashtra and Tamil Nadu in attracting the cream of manufacturing. The areas around Pune and Chennai have been preferred over the years for their infrastructure and support for the manufacturing industry. Gurgaon on the outskirts of New Delhi is another prime example of this magnetic attraction that established manufacturing locales have for investment. Credit should then be given to enterprising politicians and bureaucrats who have managed to rock the boat just enough to spread wealth into their regions.

The Rajasthan State Industrial Development & Industrial Corporation (RIICO) has plans to establish Bhiwadi in Alwar district on the auto sector manufacturing map. RIICO has already succeeded in attracting significant number of auto component manufacturers. Companies like Caparo Fasteners, Federal Mogul, Hi-Tech Gear, Amtek and Continental Engines have established facilities in Bhiwadi over the past few years. The Rajasthan auto cluster near Alwar is the third of its kind after Pune and Chennai and will produce about 60% of passenger car vehicles, 55% of motorcycles and 25% of tractors manufactured in the country.


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