Federal Mogul to outsource auto parts from India

Federal Mogul to outsource auto parts from India

TIMES NEWS NETWORK THURSDAY, FEBRUARY 24, 2005 01:42:07 AM

BANGALORE: Michigan-based auto parts maker Federal Mogul is firming up plans to outsource auto ancillaries from India through the existing joint venture business with Goetze India.

"Discussions have reached fairly advanced stages for an outsourcing agreement with Federal Mogul where we would supply auto products to their global clients taking advantage of the cost factor.

In fact, we may even set up a new plant once the demand picks after the deal and even expand the product range to include bearings and auto parts adhering to latest eco-friendly norms," said Anil Nanda, chairman and managing director, Goetze India.

The US company, which supplies ancillaries to auto majors like GM and Daimler Chrysler, holds 30% stake each in Goetze India along with Anil Nanda while public and insbreastutional investors hold another 30%.

"With the new emission norms, several unorganised players in the auto ancillary segment will have to wind up which throws up more opportunities for us. Moreover, export markets have started looking up which offers better margins," said Mr Nanda.

The company has started upgrading its manufacturing plants to introduce piston and piston rings that meet Euro III and Euro IV norms.

The Rs 500 crore Goetze India had last year signed a technology agreement with Federal Mogul to use specific proprietary technology of the latter for manufacturing contemporary pistons.

Analysts said that the company is also working towards realigning the debt-equity structure where several options are being pursued to reduce the debt component including liquidating its Rs 11 crore investments in Escorts.

Within the OEM segment, its revenues are spread across all auto players including Tata Motors, M&M, Bajaj Auto and TVS.