Tata Motors to import ancillaries from South Korea to reduce costs

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Tata Motors, which imports over Rs 2,000 crore worth auto components annually, is looking to reduce cost by setting up joint ventures with South Korean auto firms in the country.

“Last financial year, we imported auto components worth over Rs 2,000 crore from the western and eastern countries,” Satish B Borwankar, ED, quality, vendor development and strategic sourcing at Tata Motors, said. But to reduce costs, he said the company was increasingly looking at the east to increase imports by 20-25 per cent over the next two years. He said also three joint ventures with Korean firms will be set up in India in the next one-and-a-half-year to reduce the cost.

“The entire Indian auto industry will also benefit by these joint ventures,” Borwankar, on the sideline of the Korean Autoparts trade fair on Tuesday in Pune, said. He said three MoUs have already been signed between Tata AutoComp Systems, promoted by the Tata group and Korean auto components manufacture Cepla, ZF and CTR, and RSB Transmissions and Sanchen.

About 18 leading Korean auto component manufacturers at the two-day trade fair are showcasing world-class automotive technologies and products. “These companies are seeking tie-ups and alliances with Indian automobile companies,” Yong Cham Kim, director general at Kotra (Korean trade-investments promotion agency) said. He said Korea is the world’s fifth largest automobile manufacturing country.

“More joint ventures with Korean companies are in the pipeline,” Bowankar said, adding that such alliances will provide world class components at affordable price to Indian auto firms.

“Last year, Tata Motors imported auto components worth over Rs 350 crore from Korea and it would cross Rs 400 crore this financial year,” Arvind B Gurav, senior general manager (strategic sourcing), commercial vehicles, passenger cars and FB vehicles at Tata Motors, said.

“Auto components from Korea are 10-15 per cent cheaper with world-class quality compared with European, US and Japanese firms,” Borwankar said. He said although Chinese components were 25 per cent cheaper, they did not match quality.

Borwankar said there was a shift in Tata Motors policy to import auto components from western to eastern countries. “At present, we import Rs 800-1,000 crore worth components from China, Rs 500 crore from Korea and Rs 160-170 crore from Japan,” he said. He said the company was looking for more imports from low cost manufacturing firms with world-class quality from Vietnam, Indonesia and Thailand.

He said Tata Daewoo Commercial Vehicle Company (TDCV), Tata Motors wholly-owned subsidiary, and South Korea’s second largest manufacturer of medium and heavy-duty trucks, was under pressure.

“Projected demands have not materialised and slow down had impacted sales,” Borwankar said. He said the sales of 500 vehicles produced at the plant per month were hit by 25-30 per cent.

michaelgonsalves@mydigitalfc.com

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