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Abhrajit Gangopadhyay
V.K. Varadarajan

BANGALORE, Dec. 8

THE auto-ancillary company, Mico Ltd, expects sales of its automotive division to grow by 10 per cent in the financial year 2003, the General Manager, Mr Luc Geerinck, has said.

Automotive segment makes up close to 95 per cent of Mico's sales. The company reported a net profit of Rs 94.34 crore over sales of Rs 1149.63 crore for the first nine months ended September of the current year.

New products, increased original equipment manufacturing (OEM) engagements and rebound in commercial vehicle sales were likely to drive the growth, he said. The company that set a target to increase its exports to 20 per cent in three years is likely to report its exports at 15 per cent at the end of this financial year from the current level of 13 per cent. "We are in line with the export growth; in fact, it may go over the target", Mr Geerinck said.

While OEM engagements or first sales will grow approximately at 10 per cent in the next year, aftermarket or secondary sales are also seen keeping pace with the OEM initiatives. However, pressure on prices would not allow Mico to report "substantial changes" in the operating margins. The company reported it crept to 14.7 per cent in the last three quarters from 14.5 per cent.

Meanwhile, the company plans to invest close to Rs 5.5 crore in new testing equipment over the next two years. Mico also plans to spend close to Rs 5 crore in linking up dealers, stockists, and service outlets though its in-house developed software system. Close to Rs 3.5 crore has already been spent in this effort to link up the headquarters with dealers and an additional Rs 1.5 crore is likely to be spent to bring in the service outlets and some stockists within the network. "This system will help us in addressing the market much faster', Mr Geerinck said.

Mico, which is fighting the menace of spurious sales under its brand, feels that such duplicate products market in the automotive filters alone is Rs 60 crore. "We guess that these spurious sales could be in the region of Rs 200 crore", Mr Geerinck said. The sales of spurious and reconditioned parts are estimated to be in the range of close to 15 per cent of Mico's topline. Though the company has initiated several efforts to curb such spurious sales, it is yet to report any significant results.

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