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SupplierBusiness

The Indian Automotive Supplier Report

2014 edition supplierbusiness.com

Regional Report

IHS Automotive

2014 edition 2 © 2013 IHS

IHS Automotive SupplierBusiness | The Indian Automotive Supplier Report

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ContentsExecutive Summary ........................................................................................................................................................ 8Introduction ..................................................................................................................................................................... 9

Vehicle sales in 2012 .................................................................................................................................................... 9Major players in light vehicle segment ................................................................................................................... 12Medium and heavy commercial vehicle segment ................................................................................................. 13Competitive landscape ............................................................................................................................................. 14Vehicle sales decline in 2013 .................................................................................................................................... 16

Factors behind declining vehicle sales in India ............................................................................................................ 16Declining economic growth .................................................................................................................................... 16

High inflation and interest rate .....................................................................................................................................17Rising fuel prices ........................................................................................................................................................ 19

Medium to long-term outlook remains bright ........................................................................................................ 19Vehicle Production ....................................................................................................................................................... 22

Emerging exports hub ............................................................................................................................................... 23Moderation of production in 2013 ............................................................................................................................... 24Long term production outlook remains strong ............................................................................................................ 24

Investment plans of automakers ............................................................................................................................. 25India’s Automotive Component Industry ................................................................................................................... 28

Mixed performance in recent years ........................................................................................................................ 28Diverse supply base .................................................................................................................................................. 29Exports remain robust .............................................................................................................................................. 29Imports have grown at higher rate .......................................................................................................................... 30Investment declines as slowdown stretches ........................................................................................................ 32Long-term growth outlook remains strong ........................................................................................................... 33Joint-ventures ............................................................................................................................................................ 35Mergers & Acquisitions ............................................................................................................................................ 36

OEM-Supplier Relationship ......................................................................................................................................... 38Involvement of automakers in supplier development .......................................................................................... 38

Direct involvement declines post-liberalisation ............................................................................................................ 38Greater localisation driving better OEM-supplier relationship ...................................................................................... 39Technology remains a big challenge for Indian suppliers ........................................................................................... 39Automakers’ close-knit suppliers ............................................................................................................................... 40

Cost, quality, delivery (QCD) ................................................................................................................................... 41India’s emergence as a sourcing hub ..................................................................................................................... 41

Automotive Clusters in India ....................................................................................................................................... 43Cluster development ................................................................................................................................................. 43

Three major clusters ................................................................................................................................................... 43Distribution of Indian auto components manufacturers across India ................................................................ 44

Northern cluster ......................................................................................................................................................... 44Southern cluster ......................................................................................................................................................... 44Western cluster .......................................................................................................................................................... 45Competition among clusters ...................................................................................................................................... 46

Challenges for the Indian Supplier Industry .............................................................................................................. 49



1. Demand fluctuations ............................................................................................................................................. 492. Capacity expansion ............................................................................................................................................... 493. High cost of capital ............................................................................................................................................... 504. Fluctuating raw materials prices ........................................................................................................................ 515. Exchange rate volatility ........................................................................................................................................ 516. Rising operating costs ......................................................................................................................................... 527. R&D capabilities .................................................................................................................................................... 538. Free trade agreements (FTAs) .............................................................................................................................. 549. Skilled manpower shortage ................................................................................................................................ 5410. Growing competition .......................................................................................................................................... 55Challenges and opportunities go hand in hand ..................................................................................................... 55

Government Policy ....................................................................................................................................................... 56Policy environment .................................................................................................................................................... 56

Tax policy .................................................................................................................................................................. 56Union Budget for FY2014 ........................................................................................................................................... 57

Direct taxes ................................................................................................................................................................ 57Indirect taxes.............................................................................................................................................................. 58Trade policy .............................................................................................................................................................. 59

State policies .............................................................................................................................................................. 61Labour laws ............................................................................................................................................................... 61Land Acquisitions ....................................................................................................................................................... 62Policy on fuel pricing ................................................................................................................................................. 63

Industry regulations ................................................................................................................................................. 64Recent developments .............................................................................................................................................. 66

Auto Policy 2002 ....................................................................................................................................................... 66Automotive Mission Plan 2006-16 ............................................................................................................................. 66National Automotive Board ........................................................................................................................................ 67National Manufacturing Policy ................................................................................................................................... 67Government Initiatives on skills development ............................................................................................................. 67

Infrastructure Development ........................................................................................................................................ 69Transportation............................................................................................................................................................ 69

Roads: ....................................................................................................................................................................... 69Ports: ........................................................................................................................................................................ 71

Power ......................................................................................................................................................................... 72Roadblocks in infrastructure development ............................................................................................................ 72

Survey of Indian Supplier Industry ............................................................................................................................. 74Supplier Profiles ............................................................................................................................................................ 80

Aisin Seiki ................................................................................................................................................................... 80Alicon Castalloy ......................................................................................................................................................... 84Amalgamations Group .............................................................................................................................................. 86Amtek Auto ................................................................................................................................................................. 88Anand Group .............................................................................................................................................................. 91Apollo Ty ..................................................................................................................................................................... 95Ashai India Glass ....................................................................................................................................................... 99Ashok Iron Works ..................................................................................................................................................... 102Ashok Minda Group ................................................................................................................................................. 103Auto Ignition Limited ............................................................................................................................................... 106Automotive Stampings ............................................................................................................................................ 108Axles India .................................................................................................................................................................110Bagla Group ...............................................................................................................................................................112Bajaj Motors ..............................................................................................................................................................113Banco Products ........................................................................................................................................................114Bharat Forge ..............................................................................................................................................................116Bharat Gears .............................................................................................................................................................119



Bharat Seats ............................................................................................................................................................. 121Bhushan Steel .......................................................................................................................................................... 123Birla Corporation ..................................................................................................................................................... 125Birla Tyres ................................................................................................................................................................. 127Bohra Rubber ........................................................................................................................................................... 129Bosch India ............................................................................................................................................................... 130Brakes India Limited ................................................................................................................................................ 132Bridgestone India .................................................................................................................................................... 134Caparo India ............................................................................................................................................................. 136CEAT .......................................................................................................................................................................... 138Clutch Auto ............................................................................................................................................................... 140Continental ............................................................................................................................................................... 142Cooper-Standard ..................................................................................................................................................... 144DCM Engineering Products .................................................................................................................................... 146Delphi ........................................................................................................................................................................ 147Denso India ............................................................................................................................................................... 152Endurance Systems................................................................................................................................................. 158EXEDY India .............................................................................................................................................................. 160Exide Industries ....................................................................................................................................................... 162Faurecia .................................................................................................................................................................... 165Federal-Mogul Goetze ............................................................................................................................................ 167Fenner India .............................................................................................................................................................. 169Fiem ........................................................................................................................................................................... 171Gabriel India ............................................................................................................................................................. 173GKN Driveline India ................................................................................................................................................. 175Goodyear India ......................................................................................................................................................... 177Guru Nanak Auto ...................................................................................................................................................... 179Halonix ...................................................................................................................................................................... 180Harita Seating .......................................................................................................................................................... 182Hi-Tech Gears ........................................................................................................................................................... 184Imperial Auto ............................................................................................................................................................ 186IP Rings ..................................................................................................................................................................... 188Jamna Auto ............................................................................................................................................................... 190Jaya Hind .................................................................................................................................................................. 193Jay Bharat Maruti .................................................................................................................................................... 195Jay-Ushin .................................................................................................................................................................. 197JKM Automotive ....................................................................................................................................................... 199JK Tyre ...................................................................................................................................................................... 201Johnson Controls .................................................................................................................................................... 204Johnson Matthey .....................................................................................................................................................206Kalyani Forge ...........................................................................................................................................................208Kinetic Engineering ................................................................................................................................................. 210Krishna Maruti .......................................................................................................................................................... 212LG Balakrishnan ....................................................................................................................................................... 215Lucas TVS ................................................................................................................................................................. 217Lumax Automotive Systems ................................................................................................................................... 219Lumax Industries ..................................................................................................................................................... 221Machino Plastics...................................................................................................................................................... 223Madras Engineering ................................................................................................................................................ 225Magna ........................................................................................................................................................................ 227Magnetti Marelli ....................................................................................................................................................... 229Mahindra Systech .................................................................................................................................................... 231Mahle ......................................................................................................................................................................... 233Mark Exhaust ........................................................................................................................................................... 235



MRF ........................................................................................................................................................................... 236Munjal Auto Industries ............................................................................................................................................ 238Munjal Showa ........................................................................................................................................................... 240Neolite ZKW Lightings ............................................................................................................................................ 242NRB Bearings ........................................................................................................................................................... 244Omax Auto ................................................................................................................................................................ 246Pricol ......................................................................................................................................................................... 247Ramakrishna Forgings ............................................................................................................................................ 249Rane Group ............................................................................................................................................................... 250Rasandik ................................................................................................................................................................... 252Remsons ................................................................................................................................................................... 254Rico Auto .................................................................................................................................................................. 256Ring Ring Plus Aqua ................................................................................................................................................ 258RSB Transmissions .................................................................................................................................................. 259Ruia Group ................................................................................................................................................................ 261Saint-Gobain ............................................................................................................................................................. 263Samvardhana Motherson Group............................................................................................................................ 266Sanden Vikas ............................................................................................................................................................ 269Sandhar Technologies............................................................................................................................................. 270Setco Automotive .................................................................................................................................................... 272Shriram Pistons and Rings ..................................................................................................................................... 274Sigma Group ............................................................................................................................................................. 276SKF India ................................................................................................................................................................... 278Sona Koyo ................................................................................................................................................................. 280Steel Strips Wheels ................................................................................................................................................. 283Sterling Tools ............................................................................................................................................................ 285Subros ....................................................................................................................................................................... 287Sunbeam Auto ..........................................................................................................................................................290Sundaram Clayton ................................................................................................................................................... 292Sundram Fastners ................................................................................................................................................... 294Talbros Talbros Automotive ....................................................................................................................................296Tata AutoComp ........................................................................................................................................................ 299Tata Steel .................................................................................................................................................................. 302TRW Automotive ...................................................................................................................................................... 305UCAL Fuel Systems .................................................................................................................................................309Valeo .......................................................................................................................................................................... 311Varroc Group ............................................................................................................................................................ 314Victor Gaskets .......................................................................................................................................................... 317Visteon ...................................................................................................................................................................... 318WABCO India ............................................................................................................................................................ 322Whells India .............................................................................................................................................................. 324ZF India ..................................................................................................................................................................... 327

FiguresFigure 1: Vehicle sales recorded average annual growth of 14.5% between 2005 and 2012 .............................. 10Figure 2: Hatchbacks continue to dominate India’s LV market (LV segmentaiton based on body type) ........... 11Figure 3: A segment vehicles accounted for half of LV sales in 2012 (Global segmentation of LV sales) ......... 11Figure 4: Maruti Suzuki is the largest LV maker in India but its market share has declined amid intensifying competition ................................................................................................................................................................... 12Figure 5: Trucks accounted for 85% of M&HCV sales in 2012 (M&HCV sales break up by vehicle) ................... 14Figure 6: Tata Motors accounted for more than half of M&HCV sales in 2012 (M&HCV sales break up by OEM) 14



Figure 7: Vehicle sales growth has moved in tandem with real GDP growth in India ......................................... 17Figure 8: RBI has been reluctant to cut rates significantly as CPI remains high ................................................. 18Figure 9: Both petrol and diesel prices remain high affecting vehicle demand (Movement of petrol and diesel prices in Delhi from April 2010 to August 2013) ........................................................................................................ 19Figure 10: Despite immediate concern vehicle sales outlook in India remains strong in medium to long term (LV and M&HCV sales forecast 2012-–2020 ............................................................................................................... 20Figure 11: Vehicle production in India has recorded consistent growth between 2005 and 2012 ..................... 22Figure 12: Maruti-Suzuki’s market share has eroded between 2008 and 2012 (Light vehicle production market share by OEM) .................................................................................................................................................. 23Figure 13: Vehicle exports from India has tripled over the past eight years (Vehicle exports from India 2006–2012) ............................................................................................................................................................................... 24Figure 14: Vehicle production in India is expected to by 9.8% between 2014 and 2020 ...................................... 25Figure 15: Most automakers expect to see strong growth in production capacity by 2020 (Vehicle production growth projection by 2012 compared with 2020 by OEM) ....................................................................................... 26Figure 16: After three years of strong growth, turnover of Indian supplier industry took a hit in FY2013 amid continuing weak domestic vehicle sales (Indian supplier industry turnover 2008–2013) ................................... 28Figure 17: Most suppliers produce Powertrain components in India (Figures for financial year ended 31 March 2012) ................................................................................................................................................................... 29Figure 18: Europe remains biggest market for Indian suppliers (India’s Export Market 2010 and 2012) .......... 30Figure 19: Asia and Europe together accounted for more than 90% of total auto component imports in FY2011 (India’s Import Market 2012) ......................................................................................................................... 31Figure 20: Gap between exports and imports of auto component has widened over the past six years (India auto components trade: 2007-08 and 2012-13) ......................................................................................................... 31Figure 21: Suppliers have invested USD7bn between FY2007 and FY2012 ........................................................... 33Figure 22: Northern region has the highest concentration of auto parts suppliers ............................................ 44Figure 23: Supplier Parcs in India Mapped ................................................................................................................ 46Figure 24: Raw material prices has remained moderate in 2012 and 2013 so far ............................................... 51Figure 25: Indian rupee has depreciated significantly against major currencies ............................................... 52Figure 26: Power leads allocation for infrastructure in 12th FYP (Sectoral investment planned in 12th FYP) . 69Figure 27: Cargo handled in India has grown on average 8.5% between FY2006 and FY2012 (Cargo handled in India between 2006–2012) ....................................................................................................................................... 71Figure 28: Q1. India’s economic growth has come under pressure in the past few quarters. By when do you see a recovery? ............................................................................................................................................................. 74Figure 29: Q2. High inflation, a major issue for the Indian economy over the past five years, has seen some moderation in the past few quarters. Do you expect this trend to continue in the coming quarters? .............. 74Figure 30: Q3. The Reserve Bank of India (RBI) has cut policy rates in the past few quarters in response to softening inflationary pressure. Do you see room for further cuts? ...................................................................... 75Figure 31: Q4. The Indian rupee has depreciated significantly in the past few months. Do you see this as a significant threat to economic growth? ..................................................................................................................... 75Figure 32: Q5. Do you believe the Indian government’s policy regarding the automotive industry is supportive towards automakers in India? ..................................................................................................................................... 75Figure 33: Q6. India is negotiating a Free Trade Area (FTA) agreement with the EU, which is feared to result in substantial reduction in import duty for European-made cars. Do you think this would discourage vehicle manufacturing in India? ............................................................................................................................................... 76Figure 34: Q7. Vehicle sales in India have been declining since the beginning of 2013. What are the major reasons behind this weakness? ................................................................................................................................. 76Figure 35: Q8. By when do you expect a recovery in vehicle demand? ................................................................. 76Figure 36: Q9. The decline in vehicle sales has prompted local automakers’ association SIAM to seek a stimulus package – similar to the one given in 2008-2009 – from the Indian government. Do you think SIAM’s demand is justified? ..................................................................................................................................................... 77Figure 37: Q10. Considering falling sales, do you believe in the Indian automotive industry’s long-term growth potential? .......................................................................................................................................................... 77Figure 38: Q11. Where do you see vehicle sales in India by 2020 compared with the 3.62 million units in 2012? 77



Figure 39: Q12. Automakers are adjusting production capacity in India in response to recent declines in vehicle demand. Has this impacted your company’s business? ............................................................................ 78Figure 40: Q13. Has it become more challenging to secure contracts from customers amid the weak eco-nomic outlook for the Indian automotive industry? ................................................................................................. 78Figure 41: Q14. Have recent cuts in repo rates and cash reserve ratio (CRR) helped your company to cut financing costs? ............................................................................................................................................................ 78Figure 42: Q15. What has been the net financial impact (export value - import value) of recent the deprecia-tion of the Indian pupee on your company’s business? .......................................................................................... 79Figure 43: Q16. Are OEMs in India willing to negotiate contract prices due to a change in the following factors? ......................................................................................................................................................................... 79

TablesTable 1: Investments by automakers in India (from 2012 onwards) ........................................................................ 27Table 2: Recent Supplier Investment Announcements ............................................................................................ 33Table 3: Recent Supplier Joint-Venture Announcements ........................................................................................ 35Table 4: Recent Supplier Merger and Acquisition Announcements ....................................................................... 36Table 5: Maruti Suzuki has close knit of 18 suppliers in which it has some stake ............................................... 38Table 6: Automotive Clusters in India ......................................................................................................................... 47Table 7: Interest rates in some key automotive market as on 20 September 2013 ............................................. 50Table 8: Most Indian suppliers spend less than 1% of their total revenues in R&D ............................................. 53Table 9: Tax structure for foreign and domestic companies in Inida ..................................................................... 57Table 10: Development of length and surface area of roads in india 2005–2011 .................................................. 69Table 11: Development of length of national and state highways in india 2005–2011 .......................................... 70Table 12: Annual Energy Generation .......................................................................................................................... 72

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