Auto component makers on growth course in the first quarter

While the automobile sales have slowed down due to various factors in the Indian automobile market, the top Indian auto parts makers are reportedly on track to register a stellar first quarter, as robust after-sales demand and growing exports help them shrug off slowing auto sales at home.

According to reports, one of the major component makers Motherson Sumi Systems is likely to see quarterly net profit doubling in April-June boosted by earnings at an overseas subsidiary, Bharat Forge could see profit rising more than a third, while Exide Industries may report a 10 percent rise in profit, a Reuters poll of brokerages showed.

It was mentioned that while Indian car sales, which grew at a breakneck 30 percent in the fiscal year that ended in April, are now expected to grow by just 10 to 12 percent in FY12. Car sales in Asia's third largest economy, which in June saw their slowest pace of growth since March 2009, are driven by a burgeoning middle class that relies on bank loans for purchases. It was mentioned that the growth of the Indian auto component industry is directly linked to the auto sector's growth and with OEMs accounting for more than 70 percent of domestic sales.

According to reports, Motherson Sumi, the world's largest maker of rear view mirrors, may see consolidated quarterly net profit doubling to about 1.2 billion rupees on net sales of 22.9 billion rupees. The company, which also makes wiring harness and high-tension cords, had acquired Europe-based Visiocorp's rear view mirror business in 2009 and renamed it Samvardhana Motherson Reflectec (SMR). Motherson had undertaken an elaborate restructuring of the subsidiary's assets in Europe and Australia, leading to an improvement in margins.