* Manufacturers postpone capex as demand for cars slows
* Higher interest rate slowing car sales
* Industry growth seen halving this year
By Sanjeev Choudhary and Anurag Kotoky
NEW DELHI, Sept 6 A few auto parts makers in
India are deferring expansion plans as high interest rates and
fuel costs crimp demand for cars at home and growth concerns
overseas adds to the uncertainty.
The $39.9 billion Indian auto parts industry in FY12 is
expected to grow 12-15 percent, less than half the last year's
rate of 33 percent, the apex industry body Automotive Components
Manufacturers Association (ACMA) had said last week.
Minda Industries , which counts India's top car
maker Maruti Suzuki and others such as Tata Motors
, Ford Motor and General Motors , as its
clients, has halved its FY12 capex plan to 400 million rupees.
"The growth is not as good as it used to be. It's better to
wait and watch," Chairman Nirmal K. Minda said.
Minda Industries manufactures switches, panel controls and
CNG and LPG kit for cars, and has deferred 60 percent of 5
billion rupees it was planning to spend on adding capacity and
new product lines in two years.
Subros Ltd , another auto parts maker which
supplies to Maruti, Tata Motors and Mahindra and Mahindra
, too has delayed by 3-4 months its 800-million-rupee
investment plans for FY12.
"The auto sector has seen demand slowdown. That's why there
is no point in having idle capacity," said Chairman Ramesh Suri.
Auto parts maker Tata AutoComp System, part of the $68
billion Tata group, has withdrawn its sale document to raise at
least $245 million through an IPO due to poor market conditions,
a source told Reuters on Tuesday.
Cars sales dropped 16 percent in July, first drop in
two-and-half years, after growing a breakneck 30 percent in 2010
in Asia's third-largest economy and has prompted industry body
to raise the possibility of cutting forecast for FY12.
"If someone says slowdown is temporary, then it is too
optimistic to talk about," said Pawan Goenka, chief of auto
industry body SIAM and president of auto unit of utility vehicle
maker Mahindra & Mahindra.
A series of rate hikes by the central bank - eleven since
March 2010 - to tame a stubbornly high inflation has made credit
costlier in the world's second-fastest growing major auto market
where most people depend on credit for car purchase.
The rate hikes and high inflation have slowed the Indian
economy that grew 7.7 percent in the three months through June,
its weakest in six quarters, and further weakening is expected
as inflation refuses to subside and global uncertainty remains.
A section of the auto parts industry, however, sees the
current slowdown as temporary and are on track to invest to
Rico Auto Industries Ltd said it was not changing
its 300-million-rupee expansion plan for the current fiscal
"It's a temporary blip. The sector goes through cycle but
mid- and long-term prospects are very good," said Managing
Director Arvind Kapur.
Steering maker Sona Koyo said it's on track to
meet its capex plan of 1 billion rupees in the current fiscal
year and is not worried by the current slowdown.
Kapur said companies that have diversified clients and
product lines are likely to be less pessimistic in the current
"If you are dependent too much on a single customer or
product and that doesn't do well, you are dead," Kapur said.
(Editing by Rajesh Pandathil)