Auto industry will bounce back: CK Birla

B D Narayankar

THOUGH THE liquidity crisis is taking a toll on the automobile industry in India, Hindustan Motors (HM) chairman CK Birla is optimistic of the sector bouncing back by next year. "The fundamentals of the economy are strong and inflation is under control so there’s no reason why we shouldn’t bounce back. Earlier we were spending Rs 100 on the capex front, now we are spending Rs 75 due to the tight money market," he said.

The problem is that this time round the slowdown in India has coincided with a global recession. In Avtec, for instance, both Indian and overseas orders are down. So if one was trying to hedge home orders with exports, that strategy too will come unstuck in a situation like this, Birla said.

Responding to a query whether HM was looking at taking its relationship with Mitsubishi to the next level with a much deeper strategic alliance, Birla said: "When we both are happy in the current scenario, there is absolutely no need for changing things. In fact, this is the only instance where a globo-local alliance has worked, where the rest have fallen asunder. Right now we have five products from Mitsubishi stable - Lancer, Cedia, Pajero, Montero and Outlander. We are unveiling ’Montero 2009’ among many more products next year. The current set up is working for us and I don’t need to disturb it."

In the situation like liquidity crisis, a number of Asian auto companies are clamouring for partnership opportunities. Even HM is not far behind. In fact, the company had signed a memorandum of understanding with Proton seven or eight years ago, but things did not materialise thereafter. "I am told Proton has signed up with someone else," he said.

Talking about HM’s Uttarpara plant, Birla said that the company is going ahead with its plan to turn it into a component hub using excess capacity to make forging and casting components for HM’s internal use and outside business. "We are picking up more business steadily and the strategy seems to be working out," he added.

Dispelling speculations that a part of the land in Uttarpara plant was being contemplated to convert it into an IT park to unlock land value, Birla said there was no intention of the company to harm the plant. "We are 100 per cent committed to making our business strategy for the plant work. The IT Park is part of our wider strategy," he said.

Denying reports that plans were afoot to turn the Lancer plant in Chennai into a contract manufacturing facility to use its excess capacity, Birla said: "HM does not have any capacity left for licensed manufacturing of vehicles, as it was having as many as three sports utility vehicles (SUVs) in its portfolio. Currently Chennai’s capacity is 12,000 cars per annum."

Ask him about West Bengal and its business environment, unlike Tatas having to face the spectre of Singur agitation that ultimately resulted in the flight of Nano from the state, Birla is immensely is impressed with Buddhadeb Bhattacharjee government. "The West Bengal chief minister and his ministers are eager to make things happen," he said.

Source: Meri News