Revenue growth is likely to moderate to 10-12% in the current financial year, a far cry from the 37-38% growth the company is used to.
09 Nov 2024 | 14543 Views | By Amit Vijay M
Tata Autocomp Systems, India's leading auto component manufacturer, expects revenue growth to moderate to 10-12% in the current financial year due to a decline in auto sales, but expects demand to bounce back from the next year, according to Chairman Arvind Goel.
Over the past five years, the company's ...
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Tata Autocomp Systems, India's leading auto component manufacturer, expects revenue growth to moderate to 10-12% in the current financial year due to a decline in auto sales, but expects demand to bounce back from the next year, according to Chairman Arvind Goel.
Over the past five years, the company's consolidated growth rate has ranged between 37-38%. For the current year, Goel said, revenue is likely to come in at around Rs 20,000 crore, up from Rs 17,500 crore in FY24.
"Although this year's growth has been moderate at 10-12 percent, we expect to return to peak growth rates of 38-39% after FY25," he said on the sidelines of the CII Next Gen Mobility Show in Pune. With an order book of more than Rs 10,000 crore, Goel said he is "all booked" for the next two years of work.
Tata Autocomp, whose primary client is Tata Motors, also provides a wide range of automotive components to a wide range of electric two- and three-wheeler OEMs, as well as major players in the passenger and light commercial vehicle sectors.
The company also supports the manufacturing of interior plastics and composites, radiators, exhaust systems, batteries, stampings, suspensions, seating, mirror assemblies, EV powertrains, EV battery energy storage systems, and engine cooling systems.
EV Boost
The company’s growth this year is expected to come largely from EV-specific components such as battery packs and powertrains. Goel said electric vehicle (EV) sales and exports would account for more than half of the company's Rs 20,000 crore revenue this year, with each segment contributing roughly 25%, with the rest coming from its diverse core operations.
"We also intend to invest in new facilities, improve production capabilities, and localise operations to capitalise on this growth cycle and shape our future direction," he added.
Goel also said the company would try to consolidate its business by accelerating its existing joint ventures this year. Tata Autocomp has formed technical and financial joint ventures with major global auto component manufacturers, including Hendrickson International (USA), Ficosa International SA (Spain), GS Yuasa International (Japan), Magna International Inc (Canada), T Rad & Co Ltd (Japan), Hefei Gotion (China), Prestolite Electric Beijing Limited (China), and Katcon Global SA DE CV (Mexico).
According to Goel, Tata Ficosa, a joint venture, is celebrating its 25th anniversary and plans to broaden its product offering. The company's joint venture with Ficosa in Spain specialises in advanced exterior and interior mirrors, gear shifters (manual and shift-by-wire), park brake levers, washers, driver assistance modules (ADAS, surround view, LVDS cameras), and integrated antenna systems.
Goel also said the joint venture with Belgium's Punch Powertrain, formed in 2023, has begun producing, supplying, and servicing traditional Dual Clutch Transmissions (DCT), Continuous Variable Transmissions (CVT), Hybrid DCTs (both mild and plug-in), and Full EV Reducers for many of India's leading passenger car manufacturers.
The company is also investing more than Rs 500 crore to set up a dedicated DCT manufacturing facility in Chakan, Maharashtra, with an initial production capacity of 100,000.
On the EV side, Tata Autocomp is involved in the manufacturing of battery packs and battery management systems (BMS), battery thermal management systems, electric compressors, integrated motors, controllers, reducers, onboard and offboard chargers, and vehicle and power electronics such as DC-DC converters, bus bars, and power distribution units.
In response to India's heavy emphasis on electric vehicles and rising sales in this sector, Goel highlighted India's significant business development potential, especially given the current geopolitical situation.
"The country is well-positioned for future growth, citing increased EV component exports and sales, and Tata Motors is expanding its geographical presence in export markets such as Africa, Latin America, and Mexico," he indicated . When asked about the balance of internal combustion engine (ICE) and electric vehicle (EV) production, Goyal stated that ICE volumes are not declining and are expected to rise.
He predicted that as demand for components from various EV manufacturers rises, Tata Autocomp will benefit from the government's auto (PLI) scheme. An eventual PLI qualification would allow the company to receive an 8% to 11% incentive from the Automotive Component Champion Incentive Scheme, as well as an additional 5% incentive for supplying battery electric vehicle components.
Addressing the government's stringent eligibility testing standards for PLI, which only a few component makers qualify for, Goyal emphasised the importance of transparency and complete data disclosure in demonstrating the PLI scheme's localisation processes.
"By the end of the year, one of the companies will have met the requirements of the government's Auto Production-Linked Incentive (PLI) scheme," Goel said.
He acknowledged the government's stringent testing requirements and stressed the importance of businesses providing all relevant data to accurately demonstrate their localisation efforts.
"Companies must be open and honest, with no attempt to hide information or take shortcuts. This requirement extends beyond corporations to include the entire supply chain ecosystem, including MSMEs, whose ability to localise determines which component manufacturers qualify for the Auto PLI,” he noted.
He also stressed the importance of bringing along the entire ecosystem to improve consumer quality. "To ensure quality, we are training our suppliers to provide parts that meet the necessary standards. As OEMs source from a diverse range of suppliers, both their suppliers and the larger ecosystem must evolve to ensure proper quality for electric vehicles, which is critical to the success of any PLI initiative," Goel added.