The Hindu Business Line : Hind Motors bullish on auto components biz

HINDUSTAN Motors has begun to use the facilities at its Uttarpara factory to manufacture components for original equipment manufacturers (OEMs). This business is expected to go a long way in helping the company become profitable by the quarter ending September 31, 2006, according to the company's Managing Director, Mr R. Santhanam, Managing Director.

Addressing a news conference here on Tuesday to mark the launch of the Mitsubishi Cedia, Mr Santhanam said it has been felt in relevant quarters that the Indian auto components business is set to grow rapidly and is expected to be bigger than the Indian automobile business in the years ahead.

"It is felt that, just as the Indian software business is bigger than domestic software consumption, the Indian auto components business will become bigger than the Indian automobiles business," he said, adding that several global auto majors were keen on India becoming their preferred source for auto components.

According to him, HM's Uttarpara factory would be engaged in manufacturing auto components, forgings, stampings and castings for various automobile manufacturers in the region.

This would add "substantially" to the company's topline and bottomline growth.

Other initiatives that were being taken to facilitate its profitability by the second quarter of fiscal 2006-07 include the proposed introduction of two new variants of the Ambassador within the next six months.

The two variants would be positioned in the value-conscious segment and ensure better performance at lower costs.

"With the introduction of these two models, we hope to grow Ambassador's sales volumes from the present levels of 1,100 units per month," Mr Santhanam said. He added that the growth in the domestic tourism sector augured well for Ambassador sales since the car was a preferred choice of travel and tour operators.

Chennai plant: On the viability of the company's Chennai plant, Mr Santhanam said the launch of the Mitsubishi Cedia and a ramp-up of the Pajero volumes would add to the company's topline and bottomline growth "beginning this month".

It had been proposed to manufacture around 200 Lancer cars in the Chennai factory. The number of Cedia units that would be manufactured would be "considerably more" even as plans to double the manufacture of the Pajero from the existing levels of 35-40 units per month had been firmed up.

Mr Santhanam declined to hazard any guess on the number of Cedia units likely to be sold within the next 12 months.

"All I can say is that the size of the market in that segment is 1,600-2,000 units per month and we will be a dominant brand in this category," he said.