Indian Auto Component Manufacturers diversifying into aero and defence sectors
Several Indian auto component Manufacturers who have low utilization of capacities and are operating at low margins following the global meltdown are diversifying into lucrative aerospace and defence sectors.
Amtek Auto, Bharat Forge, TATA Automobile, Lumax Auto, Mahindra Systech, the JBM group and Sundram Fasteners which together account for more than half of the total revenue generated by the auto component industry are considering these options. The margins of this auto component sector has gone down to approx 5% whereas the margins in aero & defence sectors are likely to be more than 15% resulting in this change.
According to Mr Arvind Dham chairman of Amtek Auto, Margins are higher in aero & defence sectors and the existing capacity and the same components, such as forgings and aluminium castings can be used for developing defense and aerospace components." He added that "Getting into defense and aerospace segments is a natural diversification for us."
The slowdown in the Rs 500 Billion auto component industry led many firms to cut production as auto makers battled delayed purchase decisions. The Indian component industry grew by about 3% in the 2008 - 09 as compared to 2007 - 08 when the industry grew by approx 20%.
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