SupplierBusiness
The Indian
Supplier
Report
The Indian Supplier Report
CONTENTS
Executive Summary ....................................................................................................... 11
The Indian automotive industry ...................................................................................... 12
Evolution of Indian automotive industry ..................................................................... 13
Two-wheelers dominate........................................................................................... 14
Three-wheelers ........................................................................................................ 15
Light vehicles .......................................................................................................... 16
Medium and heavy duty commercial vehicle............................................................ 21
Growing competition in all segments........................................................................... 25
Moderation in vehicle sales ......................................................................................... 26
High inflation and interest rates ............................................................................... 26
Rising fuel prices ..................................................................................................... 27
Frequent strikes ....................................................................................................... 28
Industry response ........................................................................................................ 29
Medium to long-term outlook remains bright ............................................................... 30
Vehicle density remains abysmally low in India........................................................ 30
Vehicle sales and production forecast........................................................................... 31
India continues to attract new players ...................................................................... 32
Investment plans of automakers ............................................................................... 33
India’s automotive component industry .......................................................................... 37
Strong growth after global slowdown........................................................................... 37
Growth moderation in 2011-12 ................................................................................... 42
Indian supplier industry continues to attract investment ............................................... 44
Investments ................................................................................................................ 46
Joint-ventures ............................................................................................................. 51
Mergers & Acquisitions............................................................................................... 53
OEM-supplier relationship.............................................................................................. 56
Involvement of automakers in supplier development .................................................... 56
Direct involvement declines post-liberalisation............................................................. 57
Greater localisation driving better OEM-supplier relationship ...................................... 58
Technology remains a big challenge for Indian suppliers .............................................. 59
Automakers’ close-knit suppliers ................................................................................. 59
Cost, quality, delivery (QCD) ...................................................................................... 60
India’s emergence as a sourcing hub ............................................................................ 61
Automotive cluster development ..................................................................................... 64
Northern region .......................................................................................................... 65
Southern region .......................................................................................................... 66
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Western region ........................................................................................................... 66
Growth of clusters....................................................................................................... 66
Gujarat emerging as major cluster ............................................................................... 67
Competition among clusters ........................................................................................ 68
Challenges for the Indian Supplier Industry ..................................................................... 72
Demand fluctuations................................................................................................... 72
Capacity expansion ..................................................................................................... 72
Fluctuating raw materials prices .................................................................................. 73
Exchange rate volatility............................................................................................... 75
Rising operating costs ................................................................................................. 77
R&D capabilities ........................................................................................................ 78
Trade practices ........................................................................................................... 79
Skilled manpower shortage ......................................................................................... 79
Growing competition .................................................................................................. 80
Government Policy ........................................................................................................ 82
Phase 1: Draconian regulations during 1947-1980 .................................................... 82
Phase 2: Limited liberalisation during 1980-1990...................................................... 82
Phase 3: Economic reforms of 1991 and afterwards .................................................. 82
Policy environment ..................................................................................................... 83
Tax policy ............................................................................................................... 83
Union Budget for fiscal year 2012-13........................................................................ 85
Trade Policy ............................................................................................................... 89
Major bilateral and multi-lateral trade agreements .................................................... 90
State policies ........................................................................................................... 92
Labour laws ............................................................................................................ 93
Land Acquisitions ................................................................................................... 94
Policy on fuel pricing............................................................................................... 95
Industry regulations................................................................................................. 96
Recent developments .................................................................................................. 99
Auto Policy 2002..................................................................................................... 99
Automotive Mission Plan 2006-16 ........................................................................... 99
National Automotive Board .................................................................................... 99
National Manufacturing Policy............................................................................... 100
Government Initiatives on skills development ......................................................... 100
Infrastructure development......................................................................................... 101
Transportation ....................................................................................................... 101
Power .................................................................................................................... 104
India’s competitiveness in term of infrastructure in BRICS countries ........................... 105
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Survey of Indian Supplier Industry ................................................................................. 107
Interviews ..................................................................................................................... 118
Automakers ............................................................................................................... 118
Suppliers.................................................................................................................... 118
Michael Boneham, Managing Director and Sandeep Sanyal, Executive Director,
Operations; Ford Motor India .................................................................................... 119
Rahul Bharti – Head, Corporate Planning & Investor Relations, Maruti Suzuki........... 122
Bharat Parekh, Chief, Strategic Sourcing, Tata Motors ............................................... 125
Neeraj Kanwar, Vice Chairman & Managing Director, Apollo Tyres .......................... 128
Shvetal Vakil, Executive Director, Setco Automotive .................................................. 133
J Sivkumar, Pricol...................................................................................................... 135
Shailandra Bohra, Marketing Director, Bohra Rubber ................................................. 138
Amit Mukherjee, Deputy Executive Director, Automotive Component Manufacturers
Association of India (ACMA) .................................................................................... 141
Supplier Profiles ............................................................................................................ 145
Aisin Seiki ................................................................................................................. 145
Alicon Castalloy ........................................................................................................ 148
Amalgamations Group............................................................................................... 150
Amtek Auto............................................................................................................... 153
Anand Group ............................................................................................................ 157
Apollo Tyres .............................................................................................................. 161
Ashai India Glass ...................................................................................................... 165
Ashok Iron Works ..................................................................................................... 168
Ashok Minda Group .................................................................................................. 169
Auto Ignition ............................................................................................................. 173
Automotive Stampings............................................................................................... 175
Axles India ................................................................................................................ 178
Bagla Group .............................................................................................................. 180
Bajaj Motors ........................................................................................................ 118182
Banco Products ...................................................................................................... 11883
Bharat Forge.............................................................................................................. 185
Bharat Gears.............................................................................................................. 189
Bharat Seats ............................................................................................................... 191
Bhushan Steel ............................................................................................................ 194
Birla Corporation ....................................................................................................... 197
Birla Tyres ................................................................................................................. 199
Bohra Rubber ............................................................................................................ 201
Bosch India ............................................................................................................... 203
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Brakes India............................................................................................................... 206
Bridgestone India ....................................................................................................... 208
Caparo India ............................................................................................................. 211
Clutch Auto ............................................................................................................... 214
Continental................................................................................................................ 217
DCM Engineering ..................................................................................................... 220
Delphi TVS ............................................................................................................... 222
Delphi ....................................................................................................................... 224
Denso India ............................................................................................................... 227
Endurance Systems .................................................................................................... 230
EXECY India ............................................................................................................ 234
Exide Industries ......................................................................................................... 236
Faurecia .................................................................................................................... 240
Federal Mogul Goetze ............................................................................................... 243
Fenner India .............................................................................................................. 246
Fiem .......................................................................................................................... 248
Gabriel India ............................................................................................................. 251
GKN Driveline India ................................................................................................. 254
Goodyear India ......................................................................................................... 256
Guru Nanak Auto...................................................................................................... 259
Halonix ..................................................................................................................... 261
Harita Seating ............................................................................................................ 264
Hi-Tech Gears ........................................................................................................... 266
Imperial Auto ............................................................................................................ 268
IP Rings .................................................................................................................... 270
Jamna Auto ............................................................................................................... 272
Jay Bharat Maruti ...................................................................................................... 276
Jay-Ushin .................................................................................................................. 278
Jaya Hind .................................................................................................................. 280
JK Tyre ..................................................................................................................... 282
JKM Automotive....................................................................................................... 285
Johnson Matthey ....................................................................................................... 288
Kalyani Forge ............................................................................................................ 290
Kinetic Engineering ................................................................................................... 292
Krishna Maruti .......................................................................................................... 295
LG Balakrishnan ....................................................................................................... 298
Lucas TVS ................................................................................................................. 301
Lumax Automotive Systems ...................................................................................... 304
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Lumax Industries ....................................................................................................... 306
Machino Plastics........................................................................................................ 309
Madras Engineering ................................................................................................... 311
Magna ....................................................................................................................... 313
Magneti Marelli ......................................................................................................... 316
Mahindra Hinoday .................................................................................................... 319
Mahindra Systech ...................................................................................................... 320
Mahindra Composities ............................................................................................... 322
MAHLE .................................................................................................................... 324
Mark Exhaust ............................................................................................................ 328
MRF ......................................................................................................................... 330
Manjal Auto .............................................................................................................. 333
Munjal Showa ........................................................................................................... 335
Neolite ZKW Lightings.............................................................................................. 337
NK Minda Group ...................................................................................................... 340
NRB Bearings ............................................................................................................ 344
Omax Auto ............................................................................................................... 346
Panasonic Automotive ............................................................................................... 348
Pricol......................................................................................................................... 353
Ramakrishna Forgings ............................................................................................... 356
Rane Brake Linings.................................................................................................... 358
Rane Engine Valves ................................................................................................... 360
Rasandik ................................................................................................................... 362
Remsons .................................................................................................................... 364
Rico Auto .................................................................................................................. 366
Ring Plus Aqua.......................................................................................................... 369
RSB Transmissions .................................................................................................... 371
Ruia Group ............................................................................................................... 373
Saint-Gobain ............................................................................................................. 376
Samvardhan Motherson Group .................................................................................. 378
Sandhar Technologies ................................................................................................ 381
Setco Automotive ...................................................................................................... 384
Shriram Pistons & Rings ............................................................................................ 387
Sigma Group ............................................................................................................. 389
SKF India.................................................................................................................. 391
Sona Koyo................................................................................................................. 394
Steel Strips Wheels..................................................................................................... 398
Sterling Tools ............................................................................................................ 401
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The Indian Supplier Report
Subros ....................................................................................................................... 403
Sunbeam Auto ........................................................................................................... 406
Sundram Clayton....................................................................................................... 408
Sundram Fasteners .................................................................................................... 411
Suprajit Engineering .................................................................................................. 414
Talbros Automotive ................................................................................................... 417
Tata AutoComp......................................................................................................... 420
Tata Ficosa ................................................................................................................ 425
Tata Johnson Controls ............................................................................................... 427
Tata Steel .................................................................................................................. 429
Tata Toyo Radiator ................................................................................................... 433
Timken ...................................................................................................................... 435
TRW Automotive ...................................................................................................... 438
Tube Investments....................................................................................................... 441
UCAL Fuel Systems .................................................................................................. 444
Valeo ......................................................................................................................... 447
Varroc Group ............................................................................................................ 450
Victor Gaskets ........................................................................................................... 453
Visteon ...................................................................................................................... 455
WABCO India .......................................................................................................... 458
Wheels India ............................................................................................................. 461
ZF India .................................................................................................................... 464
LIST OF FIGURES AND TABLES
Figure 1: Vehicle Sales and Production in India (2002-2011) ............................................ 12
Figure 2: Two-wheelers dominates Indian automotive market both in term of sales and
production...................................................................................................................... 14
Figure 3: Two-wheeler Sales and Production in India (2004-2011) ................................... 15
Figure 4: Three-wheeler Sales and Production in India (2004-2011) ................................. 16
Figure 5: Indian Light Vehicle Sales ................................................................................ 17
Figure 6: Indian Light vehicle Production ....................................................................... 17
Figure 7: Vehicles Sales Percentage segment in India (2011) ............................................ 18
Figure 8: Audi, BMW and Mercedes-Benz sales in India (2009-2011, 2016, and 2022) ..... 20
Figure 9: India Light Vehicles Sales Forecast................................................................... 21
Figure 10: India Light Vehicles Production Forecast........................................................ 21
Figure 11: Indian Medium & Heavy Commercial Vehicle Sales and Production (2002-2011)
...................................................................................................................................... 22
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The Indian Supplier Report
Figure 12: Indian Medium & Heavy Commercial Vehicle Sales and Production Forecast
(2012-2022) .................................................................................................................... 23
Figure 13: Indian Vehicle Exports (2004-2011) ................................................................ 24
Figure 14: India's Consumer Price Inflation (Jan-09 to Jan-12)......................................... 27
Figure 15: India's Central Bank Lending Rates (Jan-09 to Sep-11) .................................... 27
Figure 16: Indian Petrol and Diesel prices (Mar-10 to Dec-11) ......................................... 28
Figure 17: BRIC GDP Forecast (2008-2014) ................................................................... 30
Figure 18: India has one of the lowest car densities in the world....................................... 31
Figure 19: Vehicle Sales and Production Forecast in India (2012-2022) ............................ 32
Figure 20: Turnover of India's automotive parts industry ................................................. 37
Figure 21: Components Manufactured in India by use in Vehicle ..................................... 38
Figure 22: India’s Auto Component Export Destinations Percent Share (FY2010-2011) ... 39
Figure 23: India’s Auto Component Export Destinations Percent Share (FY2009-2010) ... 39
Figure 24: India’s Auto Component Import Locations Percent Share (FY2010-2011) ....... 40
Figure 25: India’s Auto Component Import Locations Percent Share (FY2009-2010) ....... 40
Figure 26: Indian export and import value in USD (2005-2011) ....................................... 41
Figure 27: Two-wheelers and commercial vehicles continue to drive industry growth ,
passenger vehicles segment recorded impressive recovery ................................................ 43
Figure 28: Production of Light Vehicle Engines and Transmissions in India ..................... 44
Figure 29: Indian Supplier Investments in USD (2005-2011) ............................................ 45
Figure 30: Map of Automotive Clusters in India .............................................................. 70
Figure 31: Raw Material Prices ....................................................................................... 74
Figure 32: Exchange Rate – INR against USD (Jan-10 to Jan-12) .................................... 76
Figure 33: Exchange Rate – INR against EUR (Jan-10 to Jan-12) .................................... 76
Figure 34: Exchange Rate – INR against JPY (Jan-10 to Jan-12)...................................... 76
Figure 35: Cargo handled at major Indian ports from 2004-05 to 2010-11 ........................ 103
Figure 36: Indian ranks third in terms of infrastructure among BRIC countries................ 105
Figure 37: Survey – More than 60% of suppliers expect India’s automotive market to grow
at 10-20% over the next five years .................................................................................. 107
Figure 38: Survey – High inflation and interest rates ‘very important’ challenges for
suppliers ........................................................................................................................ 108
Figure 39: Survey – Retaining talent ‘most challenging’ issue for suppliers ...................... 109
Figure 40: Survey – Volatility in OEM demand, input costs fluctuation weigh heavy on
suppliers’ minds............................................................................................................. 110
Figure 41: Survey – Maruti Suzuki, Volkswagen most attractive OEMs among suppliers . 111
Figure 42: Survey – Toyota, Volkswagen and Honda most exacting about testing and
validation of components............................................................................................... 112
Figure 43: Survey – Maruti Suzuki, Volkswagen and Toyota rank high on demanding
supplier expansion ......................................................................................................... 113
Figure 44: Survey – Hyundai ranks high on contract finalisation with suppliers ............... 114
Figure 45: Survey – Maruti Suzuki, Hyundai quicker with supplier payments.................. 115
Figure 46: Survey – All OEMs ‘good’ in terms of payment terms negotiation with suppliers
..................................................................................................................................... 116
Figure 47: Survey – Ford, Toyota rank high on ‘return on investment’ they offer suppliers
..................................................................................................................................... 117
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The Indian Supplier Report
Table 1: Investment plans in India .................................................................................. 34
Table 2: Maruti Suzuki has 19 JV vendors, 11 of which are located in its Supplier Park
enabling component delivery not only just-in-time but also just-in-sequence ..................... 56
Table 3: List of Automotive Clusters in India .................................................................. 71
Table 4: Indian Supplier’s R&D Spend compared with Global Suppliers .......................... 78
Table 5: Presence of major global suppliers in India ......................................................... 81
Table 6: Budget 2012-13: Highlight 2012-13 .................................................................... 87
Table 7: Annual Energy Generation ............................................................................... 104
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