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ACMA, the apex body representing IndiasAuto Component manufacturing industry,announced the findings of its IndustryPerformance Review for fiscal 2010-11. Theturnover of the auto component industry stood atRs. 182,127 crores (USD 39.9 billion) for theperiod April 2010 to March 2011, registering agrowth of 34 per cent (in rupee terms) over theprevious year. This data represents the entiresupplies from the auto component industry to theon-road and off-road vehicle manufacturers andthe aftermarket in India and overseas from ACMAmember and non-member companies, includingcomponent suppliers captive to the OEMs and theunorganized & smaller players.

Auto component consumption in 2010-11, intandem with the significant growth in the vehiclesales in the domestic market grew at a robustpace. However, in the current fiscal, with businesssentiment in the vehicle industry moderating, theauto component industry is expected to grow inthe range of 12-15%.

Commenting on the industry performance, ACMAPresident, Srivats Ram said: The auto compo-nents sector, in sync with the vehicle industry,grew to a healthy USD 39.9 billion in 2010-11.The exports especially with signs of recovery inNorth America, Western Europe and Asianmarkets grew by 54% over the last year to touchUSD 5.2 billion. Imports crossed USD 8.5 billion,growing 30% over the last fiscal. The first quarterof 2011-12 witnessed some slowdown in vehicleconsumption in India and this seems to suggestthat the growth in the auto component industry inthe current fiscal will be in the range of 12-15%.

Addressing the challenge of access to capital inthe auto component industry he elaborated, Thegrowth in the auto component industry willrequire cost-effective funding across the varioustiers in the industry to ensure that adequate capitaladdition takes place to fund the future growth. Itis important to recognize that the relative scaleand size of companies in the industry will growover a period, and the need to provide fundingbased on the potential that industry players offer.As the scale and sophistication of the automotive

industry evolves, the nature of technologyrequired will also change and require capital toensure both global competitiveness and technol-ogy leadership.

Delineating his thoughts on the current policyenvironment and the need for supporting Autocomponent manufacturing in the country, ACMAVice President, Arvind Kapur said: It is importantthat investments are made in core manufacturingprocesses to ensure that there is adequate in-country value-add to secure our position as aglobal hub for automotive manufacturing. Herein,policies should encourage core manufacturingover purely assembly oriented investments inautomotive technology.

On foreign trade, India should considerestablishing Foreign Trade Agreements (FTAs)with countries like Brazil, South Africa etc. whoalready have a ready market for our products. Wealso need to ensure that FTAs do not result ininverted duty structures and that they are not adisincentive to source or manufacture in India.Further on the exports front, it is important thatthe government continues its scheme of exportincentives, as many of our export contracts arelong term in nature. , added Arvind.

Sharing his thoughts on the need for a conduciveecosystem for the auto component industry inIndia, ACMA Executive Director Vinnie Mehtasaid, In order to keep the growth momentum, asalso to stay competitive, the industry, on one hand,needs to optimise capacities, raise capital, absorbtechnologies, build R&D competence, concentrateon innovation, focus on internal governance anddevelop strong organization; on the other,Government needs to focus attention to addressthe challenges of access to capital, availability ofskilled manpower, rapidly increasing inflation,

access to technology and lack of proper infra-structure, including power.

Some of the other observations of the ACMAIndustry Performance Review 2010-11: Exports: The Exports of auto componentsgrew to USD 5.2 billion from USD 3.4 billion in2009-10. Europe accounted for 36% of exportsfollowed by Asia and North America at 28% and23% respectively. Although the proportion ofexports to Europe declined from 40% last year to36%, however in absolute terms the exports grewby 46%. Exports to North America and Asia grewby 65% and 48% respectively. With exports toNorth America, Europe Asia and other parts ofthe world are improving, a full recovery ofexports are expected to gain strength in 2011-12.

Imports: With growth in the domestic market,imports of auto components also grew by 30% toUSD 8.5 billion from USD 6.5 billion in 2009-10;almost 85% of the imports were accounted for bythe OEMs, the rest 15% by the aftermarket. Asiaand Europe contributed to over 56% and over35% of the imports respectively. Within Asia,China, South Korea and Thailand contributed tothe maximum imports to India while from Europethe key contributors were Germany, Italy andCzech Republic. The quantum of imports has alsoincreased due to several FTAs and other tradeagreements signed by the Government.

Capacity Addition: The auto componentindustry added capacity in the range of USD 2 -2.25 billion in 2010-11 in several green-field aswell as expansion projects. The cumulativeinvestment (gross-block) in the auto componentsector in India over the last five years stood atover USD 6.5 billion. The industry is expected toadd at least another similar number in capacityaddition 2011-12. Y

2010-11: Indian Auto Component industry recordsUSD 39.9 billion in turnover; grows 34%

INDIAUp!Solutely Innovative

38 | autoASIA |September-October 2011

Industry expected to grow 12-15% in2011-12 Recommends Policy initiatives toencourage core-manufacturing

On September 6, 2011, New Delhi, ACMA, theapex body representing Indias AutoComponent manufacturing industry, unveileda joint study by M/s JD Power Asia Pacific presentingInsights into Supplier-OEM relationship: ABenchmarking Study The study was released by MrPraful Patel, Union Minister for Ministry of HeavyIndustry & Public Enterprises at ACMAs 51st AnnualSession in New Delhi.

The study aimed at understanding and analysing therelationship between the suppliers and OEMs in selectmarkets on the basis of trust and dependability, drivenby a common purpose of commercial success andbusiness development, delineates several keyparameters that suppliers need to focus upon todistinguish their performance from others. Theinterface study gives directions to help suppliers makebetter strategic decisions when dealing with the OEMs.The study, a must read for decision makers in theautomotive industry, suppliers and OEMs alike, hasvarious exciting findings about the relationshipbetween Suppliers and OEM in the Indian domesticmarket benchmarked against practices in the developedmarkets of USA, Germany, France and the emergingmarket of China.

Commenting on the findings of the study, PresidentACMA Srivats Ram said, The benchmarking study

INDIAUp!Solutely InnovativeMedia Brief on ACMA-JD Power initiative:

Insights into Supplier-OEM relationship: ABenchmarking Study

Trust drives Supplier-OEM relationship in India

Innovation, Technology and Design is key to future;Consolidation of Supplier base imminent

Price Pressure on suppliers intensifies across the globe

indicates that the industry stands to gain from deeperengagement across the industry value chain. Beyondthe conventional criteria of Quality, Cost and Delivery,OEMs across the world prefer to engage with supplierswith stable lines of communication, good work culture,effective process orientation and end-customerknowledge. Further they prefer suppliers who canjointly work with the OEMs in developing productsand technologies to be delivered with a globalfootprint. OEMs today are consolidating and lookingto optimise their points of contact for efficient andeffective supplier management and cost savings.Consolidation of supplier base will call for Tier-1suppliers to continuously upgrade and even handholdthe Tier-2 suppliers. This will enhance businessopportunities for suppliers in the future, but will posesignificant challenges, as Tier-1s will have to invest inrequisite skills and resources to manage an integratedsupply chain.

While the growth prospects of the Indian autocomponent industry remain very promising in the longrun, there are a new set of challenges that we face aswe evolve into a critical part of the global auto eco-system. For Indian suppliers, on one hand there is theneed to maintain competitiveness in an inflationaryenvironment and on the other the need to compete withthe best in an increasingly uncertain global market.Strong working relationship and world-class

capabilities congruent with global standards ofexcellence are essentials for the fast changingrequirements of the customers. The study attempts toanswer few questions in this context, which are criticalfor sustainable growth., added Srivats.

Some Key findings of the study:The study, an understanding of the perceptions of theOEMs and the auto component suppliers, involveddetailed opinion interviews as well as response elicitedthrough questionnaire of over 70 OEMs and suppliersin India, China, USA and Europe reveals, amongstothers, the following key attributes:

While Quality, Cost, Delivery remain critical pre-requisites that define the relationship between OEMsand their Tier-1 Suppliers, multiple key enablers arecritical in defining a stronger business relationshipbetween them.

Akin to India, in international markets too, bothsuppliers and OEMs have been struggling with theshortage of skilled manpower. This needs to beaddressed in an urgent manner.

In China and India, OEMs are more focused onhelping the supplier improve and grow, while inEurope; the focus is on improving supplier delivery.

Product liability will be an area of challenge in Indiaas we go forward. Suppliers need to focus onunderstanding the contractual risks, devise ways toinsulate themselves and contractually manage Tier 2 &3 suppliers in accordance. They will have to gear up toaddress the challenges of Product recall, warranty &part traceability.

In China, suppliers are singularly challenged to meetthe demand; they are relatively less impacted by otherissues.

In USA the suppliers-OEM relationship is pivoted oninnovation in products and processes. Suppliers willcontinue to face pressure as OEMs there are likely toincrease thrust on sourcing from low cost countries.

In Europe, while the forecasting of demand/orderingby OEMs is fairly streamlined, the prevalent marketconditions pose immense pressure on the suppliers onall parameters of cost, quality and delivery. Y

46 | autoASIA |September-October 2011

ACMA, the apex body representingIndias Auto Component manufacturingindustry, at its 51st Annual Sessiontoday announced the change in guards at theAssociation with Arvind Kapur, ManagingDirector, Rico Auto Industries Ltd. taking overas the new President and Surinder P. Kanwar,Chairman & Managing Director, Bharat GearsLtd. as its Vice President for the term 2011-12.

Announcing the new President and the VicePresident for 2011-12, Vinnie Mehta,Executive Director, ACMA said, We arepleased to have Arvind Kapur on board as theACMA President, an industry veteran, withvast exposure to the auto industry. We arealso delighted to have Surinder P. Kanwar asour Vice President, another respected leaderfrom our industry. Further, the new ACMAExecutive Committee comprises some of theprominent leaders from the auto componentsector. We look ahead to their activeengagement and contribution.

Speaking on ACMAs work priorities for thecoming year, the new ACMA President, ArvindKapur said "It is a matter of great pride to bethe President of ACMA at a juncture when theauto component industry in India is gearingup to take head-on the multiple challenges itfaces, owing to the dynamics of the globaland domestic markets. The uncertainty in theinternational markets as also increase ininterest rates and fuel prices, has led tomoderating of growth in vehicle consumption.In order to keep the growth thrust and to staycompetitive, the industry, on one hand, needsto optimise capacities, raise capital, absorbtechnologies, build R&D competence, focuson internal governance and develop strongorganizations; on the other, Governmentneeds to address the challenges of access tocapital, availability of skilled manpower,rapidly increasing inflation, access totechnology and lack of proper infrastructure.

The newly elected ACMA Vice President,Surinder P. Kanwar, said I am grateful to theindustry for reposing faith in me. The auto

Arvind Kapur takes over as the new ACMAPresident; Surinder P. Kanwar appointed Vice President

component consumption in 2010-11, intandem with the significant growth in thevehicle sales in the domestic market grew by34% to USD 39.9 billion. However, in thecurrent fiscal, we have witnessed some-whatslowing down of growth in vehicle consump-tion, the auto component industry istherefore expected to grow in the range of12-15%.

About ACMA:The Automotive Component ManufacturersAssociation of India (ACMA) is the apex bodyrepresenting the interest of the Indian AutoComponent Industry. Its active involvementin trade promotion, technology up-gradation,quality enhancement and collection &dissemination of information has made it avital catalyst for this industrys development.ACMAs charter is to develop a globallycompetitive Indian auto component Industryand strengthen its role in national economicdevelopment as also promote businessthrough international alliances. ACMA is anISO 9001:2008 certified Association.

INDIA Up!Solutely Innovative

Arvind Kapur-new president ACMA,Vinnie Mehta- Executive Director, ACMA and Surinder P. Kanwar-Vice President,ACMA

autoASIA | September-October 2011 | 47

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