It’s a smooth ride for the ancillary units this quarter

It’s all merry for the folks in the automobile sector, with the phenomenal success that the sector has seen in recent times, the auto parts (ancillary) industries are also on a roll. The auto part companies have mulled to show a positive growth in this quarter. For the simple reason, the demand for vehicles will lead to more demand for auto parts.

Courtesy to some reports by an agency, it was revealed that the domestic auto parts makers like Motherson Sumi Systems, Bharat Forge and Exide industries would witness a jump in profits which could be anywhere in the range of 17 percent to 70 percent, the figures been calculated by a poll conducted on 21 brokerages. The second largest forging makers, Bharat Forge, are known to register a 72.6 percent rise in the months October to December. The sales went northwards with a rise of 71.3 percent. The quarterly reported is expected by 22 January 2011.

The ever expanding Indian economy, which boosts consumer spending as well as disposable income, is the fastest growing market in terms of volumes around the world. The small car segment saw a growth of 31.83 percent in the months April to December 2010. Commercial vehicles grew at a cumulative rate of 34.08 percent.

Experts and analysts have billed Bharat Forge to be the most profitable due to its pass-on clause. It has entered into MoU’s with all the major companies with this clause, so they are pretty much assured of the company to get over the rising prices on input materials. India’s numero uno industrial and auto battery maker, Exide, is also touted to witness a rise in profit by a significant 32.6 percent with the rise in sales of 30.3 percent. Over the past three years, Exide has been on an acquisition drive with refining and smelting units now in its folds in Pune and for lead in Bangalore. These two components make-up 70 percent of the cost of material, in any battery. Results of the company is expected on January 18 2011.

Motherson Sumi, according to analyst, the wiring harness leader, is clocking a 17 percent rise in net profit. Like the forging major, it also has a pass-on clause with all the OEM’s. Sales for the same have been rising consistently at 16.7 percent thanks to the sky rocketing passenger car market.

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