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With their eyes set on the growth path, Rajkot-based auto components manufacturers are planning to invest Rs 200-250 crores towards capacity expansion and automation during the current financial year 2012-13.
According to industry sources, in past two years, more than 100 new manufacturing units have started their operations in this region. Courtesy, a number of automobile majors setting up their operations in Gujarat.
This has also prompted many of the Rajkot-based auto components manufacturers to expand their production capacity. The auto components industry in the region is growing at the annual rate of 30-40 per cent.
"Over Rs 250 crore worth of investments are expected to be made in components industry at Rajkot during the current financial year. This is because several auto giants are eyeing Gujarat for their manufacturing facilities. Moreover, small players are endeavoring to become tier-1 suppliers," Hemant Shiparia, past chairman of Confederation of Indian Industry (CII), Saurashtra and Kutch region.
Adding further he said, "Most of the players in Rajkot are tier-2 suppliers and doing aggressive marketing for their products in national and international market through participating in auto exhibitions."
Tier - 1 suppliers are those who supply components directly to the original equipment makers (OEMs), while tier-2 suppliers supply these components to bulk buyers.
Amul Industries, a leading suppliers of auto components to OEMs, is also expanding its production capacity of crank shafts from the current 3,000 units to 5,000 units per months. For this, about Rs 5 crore worth of investment is planned. The company currently supplies parts to auto companies like Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Ashok Layland, John Deere and several others.
"It becomes necessary for us to expand capacities as auto components demand has increased in past two years. Moreover, manpower shortage in the industry forces us to go for automation. Many manufacturers from Rajkot are investing depending upon their capacity," said Sanjiv Vadodaria, director of Royal Engineers.
Royal Engineers makes pins, steering and suspension parts for cars. The company exports over 70 per cent of its production to the European countries. It is a tier-2 supplier in India and now trying to become tier-1 supplier.
"We are now trying to be a direct suppliers to auto major and for that we are preparing to double our production in this year with an investment of about Rs 25-30 lakh on automation," Vadodaria said.
Another Rajkot-based components manufacturer Kadvani Forge Limited that supplies gear box parts to Mahindra & Mahindra, General Motors, Tata Motors and Ford, is also planning partial automation at its plant.
Himanshu Dhaduk, managing director of Kadvani Forge said, "We are going to invest about Rs 30-40 lakh in our plant for automation. It will reduce our dependence on manpower and increase our quality. We are also focusing to utilise our production capacity from present 1,500 tonnes to 2,800 tonnes per month."
City-based ISK Bearings Industries - the only producer of clutch release bearing and wheel hub unit in India is considering to start new unit in Rajkot.
"Currently, we are at the developing stage as we are just two years old company. There are several expansion plans, under which we will invest about Rs 1 crore during this year on machinery and new channel line of production," said Haresh Hadvani, managing partner of ISK Bearing Industries.
ISK has also signed an MoU with Gujarat government in the Vibrant Gujarat Global Investor Summit held in January 2011. Company has demanded land near Rajkot to start state of the art production unit.
According to industry estimate, there are around 500 auto component manufacturers at Rajkot. Out of these around 50 are suppliers to OEMs, while the remaining are small players that supply to the retail market. The industry in Rajkot produces more than 300 types of parts for the automobile industry and employs about 10,000 people. The industry has a turnover of around Rs 800-1000 crore per annum.