X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian auto ancillaries down on quality - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 25, 1999

    Indian auto ancillaries down on quality

    The Association of Indian Automobile Manufacturers (AIAM) has given Indian auto ancillary units a thumbs down on quality consciousness. This was reported by a leading financial daily.

    The AIAM study cites an AT Kearney survey showing that defect rates in Indian auto ancillaries (including the popular suppliers) are in the range of 1,000-2,000 parts per million (ppm) against a Japanese average of 100-200 ppm. The biggest challenge for the local auto ancillary manufacturers is to upgrade technology and quality.

    One area where domestic units compare favourably with their international counterparts is in terms of costs. Lower labour costs (one-twentieth of Japanese costs) gives Indian auto ancillary companies an absolute cost advantage of 20-30% over their Japanese counterparts. The absolute cost advantage could have been even higher except for the fact that Indian companies have lower labour productivity, which nullifies a part of the cost advantage.

    Auto ancillary exports have enormous growth potential largely due to India's inherent cost advantages. A large number of joint ventures have enabled local manufacturers to upgrade themselves in terms of quality. Moreover, they have established relationships with leading global manufacturers, which has helped them to bag orders in overseas markets. In Sundram Fasteners, Indian auto ancillary units have the example of a company, which on the basis of its rigid quality, cost control and prompt delivery schedules, has bagged the No.1 supplier award from General Motors Corporation USA.

    By the year 2002, the Indian auto ancillary sector hopes to target exports of US$1 bn. Given the figure of $300 m that it posted in FY98, this looks very ambitious. To emerge as a major in world markets, the sector needs to export at least a fourth of its sales value.

    In the near future, companies will need to have manufacturing lines that can be adapted for new models, strong technology backing, an ability to export to developed markets, market dominance in specific products and a growth plan driven by volumes and product innovations.

     

     

    Equitymaster requests your view! Post a comment on "Indian auto ancillaries down on quality". Click here!

      
     

    More Views on News

    Atul Auto: Demonetization Impacts Volumes and Profitability (Quarterly Results Update - Detailed)

    Mar 1, 2017

    Atul Auto has reported a 11.2% YoY decline in the topline while the bottomline has declined by 23% YoY.

    Bharat Forge Ltd: Subdued Performance, Recovery on Cards? (Quarterly Results Update - Detailed)

    Nov 22, 2016

    Bharat Forge has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, revenues declined by 20.1% YoY and net profits declined by 26.3%.

    Exide Industries: Good show amid the broad based recovery! (Quarterly Results Update - Detailed)

    Oct 28, 2016

    Good show amid the broad based recovery

    Endurance Technologies Ltd (IPO)

    Oct 4, 2016

    Equitymaster analyses Initial Public Offering (IPO) of Endurance Technologies Limited

    GNA Axles Limited (IPO)

    Sep 14, 2016

    Should you subscribe to GNA Axle IPO?

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    COMPARE COMPANY

    MARKET STATS