CHENNAI, July 13: Mahindra Ford India Ltd's (MFIL) Rs 1,700 crore passenger car project coming up at Maraimalai Nagar, near Chennai has proved to be a downstream bonanza for the state of Tamil Nadu. It has catalysed the creation of capacities for components, hitherto not manufactured in the state, with investments alone in these areas set to top the Rs 250 crore mark.

Although Tamil Nadu has spawned a strong auto ancillary industry with giants like the TVS, Amalgamations and Rane groups, certain components like sheet metal, seats, doorboards, exhaust assemblies, wiring harnesses and power steering were so far not manufactured in the state.

As a senior official with a leading auto company said, "Though the state has a strong vendor base, it is not complete in all aspects. Not all components required for cars are available here."

Mahindra Ford's localisation strategy and its preference for `just-in-time' (JIT) delivery has brought new products and investments into the state.

Motherson India in collaboration with BTR for plastics, Jai Bharat with Krupp Camford for sheet metal and axles, Arvin Exhausts of the Anand Group for exhausts, Siemens for wiring harnesses, Auto Interior with Irausa for doorboards and Tata Johnson Controls for seats are some companies which will set up plants near Mahindra Ford Iindia Ltd's Maraimalai Nagar site.

These products will be manufactured in the state for the first time.Speaking to The Financial Express, Mahindra Ford vice-president (supply) Sandip Sanyal, said about 75 per cent of local components to be sourced for the Fiesta project, would come from within the state.

According to a senior official with Jai Bharat, the company may invest as much as Rs 100 crore in the next few years, in its sheet metal and axles plant coming up near Mahindra Ford India Ltd's site. A Motherson India official pegged the company's proposed investment in the state at over Rs 30 crore.

Three companies each from the TVS and Rane groups have made it to MFIL's first vendor list released recently. While the former's Wheels India, Brakes India and Lucas TVS are established players, the latter's Rane-TRW, Rane-Nastech and Rane-Luk are relatively new companies, set up in collaboration with international players.

Mahindra Ford India Ltd, which recently finalised the first batch of its vendors for its Fiesta car project, has also encouraged joint ventures between its global suppliers and local component manufacturers.

According to Sanyal, who is in charge of Mahindra Ford India Ltd's vendor development, Indian ancillary units have the manufacturing expertise, but fall below international standards in design capability. Joint ventures with international players can help bridge this gap, he added.

He said local ancillary units could stay price competitive without compromising on quality, despite initial low volumes.

This could be achieved by making a judicious investment mix and leveraging the low labour costs.Elaborating on Mahindra Ford India Ltd's vendor development strategy, Sanyal said all vendors had to go through its advance product quality programme (APQP). Mahindra Ford India Ltd's purchase agreement with its vendors also clearly specifies that they have to strive to get QS 9000 certification.

This would help Indian vendors achieve international standards and hence throw up export opportunities, he said.

Mahindra Ford is a joint venture between Ford Motor company, USA and Mahindra & Mahindra. The Ford Escort is being manufactured at Nashik with a current local content of 35 per cent. This will be increased to 50 per cent by March 1998. Some of the vendors identified will also supply components for the Ford Escort.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.