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Italians keen to grab a share of the auto component pie
Neeraj Saxena
January 20: Many small and medium auto component manufacturers from Italy have struck it rich in India. And they are in a hurry to set up their base here to carve a slice of what they feel is one of the most lucrative auto markets at present, recession notwithstanding.Half a dozen Italian companies such as Graziano Transmissioni, San Velrino, OLAS snc, Gestind, Fifft SPA and Meccanotecnica Codognese have almost firmed up their plans of an India presence in some way or the other. There are others like Firegom, TEMI, Amgom and Cavis which are also keen to enter the Indian market and are holding talks with prospective suitors. Over 20 small and medium Italian companies came to the Expo '98, looking for business opportunities. They were here under the umbrella of Centro Estro, the Foreign Centre of the Piedmontese Chambers of Commerce. Graziano Trasmissioni, Europe's leading manufacturer of synchronizers, gears, transmissions and axles, has been granted permission by the Foreign Investment Promotion Boardto start a wholly-owned subsidiary in Greater Noida. The company had earlier wanted a JV with an 89 per cent stake, which did not work out. Piazza Salvi, sales manager of the group, told The Financial Express that the company was already in the process of finalising its initial supply contracts with Indian companies like Eicher, Mahindra and Mahindra, Telco and Escorts. Trasmissioni aims to start production of gears in its unit by year-end, followed by synchronizers. The company is unlikely to face any competition in the synchronizer segment, but in gear segment there will be stiff a competition from the Indian manufacturers. Hence, a major chunk of gear production will be exported to Europe, while synchronizers will be primarily meant for use in Indian tractors, trucks and commercial vehicles. Later, the company could also woo the car industry. The initial project cost is likely to be between $15 and 20 million, according to Salvi. The land has already been acquired and resident staff will be here fromItaly within a month's time. The company will shortly begin hiring Indian staff. OLAS, a $5 million company engaged in design die-construction of sheet metal parts and tooling, signed a technology transfer agreement with a Delhi-based small sector company, Horizon Industrial Products Pvt Ltd,last Friday. The tie-up is OLAS' first ever outside Italy. Oswaldo Tappero, managing director of OLAS, said that the company will also be marketing its other products in Indian market through Horizon which has an annual turnover of about Rs 8 crore. There is a possibility of a JV in the near future for boosting production for exports, indicated Tappero. OLAS will also sell some machines to Horizon, besides the knowhow. OLAS is a supplier to Olivetti, Mercedes, Opel, Audi, Volkswagen and Skoda, Horizon supplies to Maruti Udyog, General Motors, Daewoo Motors, Hero Honda and Yamaha amongst others. ``The tie-up has been very carefully thought about. We both thought we could benefit from the obvious synergies in our
areas of operation as well as our styles of functioning,'' said Tappero. San Velriano, a first-tier global supplier to Fiat, Volvo, Renault, Mitsubishi, Audi and Volkswagon, said it will pump in $2 million and the technology in an existing, privately-held Indian component-making company. San Velriano manufactures carpets and mats meant for use in car floors and bonnets. Though the Indian company is already a major supplier to well-known car manufacturer, the JV will expand the supply to aim at practically all the Indian auto companies. Gestind MB, another big name in the Italian component industry and a major Fiat supplier, is scouting for a partner to manufacture steering wheels, besides arm and head rests, gear knobs and wheel covers. It has had talks with some existing steering makers as well as with Bajaj Tempo and Telco. It is keen on having more than one venture in India. According to Gestind's marketing director, Cerrato Bruno, its Indian arm will aim at a first-year turnover of as much as $10
million. The venture will also cater to Gestind's supply needs for the Far East markets like China, Myanmar and Vietnam. Bruno said he expected the Indian facility to be in place before the end of the year. TEMI, which sells heat shields for engine and electrical protection and has amongst others Fiat, Iveco and Magneti Marelli as its end customers, has held talks with Ashok Leyland and Hero Honda, in hope of a technical tie-up.``Depending on the results, we would later look at a direct entry, or a JV for production here. I believe no Indian company is at present able to provide a similar technology. So there would be no competition,'' said the TEMI represenative, Dante Asnaghi. Fifft SPA sells lamps and headlamps for several European and Japanese car makers through first-tier suppliers. It has been buying lamps from two major Indian companies in the field: Autolite and Neolite in the past.It is now looking at an existing company with big operations for a partnership whereby it could provide its patented
technology of plastic injection moulding for production in India. If a JV is signed, Fifft will be keen on the export and buy back option for the venture, its general manager, Orazio Formento told The Financial Express .Meccanotecnica, which supplies fuses, fuse holders, connectors, terminals, radiator caps and water and oil sensors for the likes of Fiat, Delphi, Renault, Piaggio, Mareli and Bosch, is eyeing the expanding Indian OEM market, according to a company representative. ``Potential of Indian market is right now the greatest in the world, and the earlier we start, the better chance we have of doing well,'' said Fulvio Toscani. A Lamborghini and Ferrari supplier, Firegom's representative, Maria Ramello, told The Financial Express that it has already been in touch with some Indian companies for the past few months.If a JV could still not be signed, Firegom would be keen to sell its technology of making extruded seals, engine hoses and certain moulds and dies. Most of these component
manufacturers have been supplying to the first-tier original equipment manufacturers (OEM) suppliers of almost all well-known names in the European car industry. As the European car market is reaching a stagnation, the OE suppliers have also had to move along with the auto majors like Fiat, Iveco, Piaggio, Marelli, Volkswagon, who have set shop in newer, emerging markets like India. The first-tier global suppliers are largely sourcing the non-critical components locally since they are available cheaper. This has stunted the growth of Italy's small component makers. ``Though rich on design, they don't have the mega bucks and are not resourceful enough to ensure a competitive global supply to the first-tier manufacturers,'' said Ferruccio Blanc, executive manager of Centro Estro.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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