Fenner India earmarks Rs 100 crore for acquisition of auto component unit

According to Raghupati Singhania, chairman, Fenner (India) Limited, the company has budgeted around Rs 100 crore to acquire or set up a greenfield unit for the project. "Eight out of ten vehicles that are made in India have one of our products — belts or oil seals. This gave us the idea to get into making other components as well."

Fenner India, which manufactures V-belts, oil seals and power transmission products (pulleys, couplings, bushes) for industrial and automotive sectors, is expanding its capacity by setting up oil seal and belt plants in Chennai (investment Rs 15 crore, 4 million units) and Hyderabad (Rs 25 crore, 36 million units) respectively. According to Singhania, the company will be shifting the existing production facilities in Chennai to the proposed one.

This apart, the company will be investing Rs 35 crore in modernising its existing facilities over a period of three years.

Producing around 72 million oil seals and 18 million belts per annum, the company's capacity will go up by 60 per cent after the new investments and the turnover is expected to touch Rs 500 crore.

Speaking about the domestic market for the belts and oil seals C Suresh Kumar, vice president, sales and marketing, said, "The size of the domestic oil seal market is around Rs 250 crore and that of the belts is around Rs 220 crore. The market could be further sub divided into industrial and automotive. In the case of oil seals, the industrial segment account for just 10 per cent while the automotive industry consumes 90 per cent. On the other hand, industrial belts accounts for 55 per cent of the total industry sales while the balance is accounted by the automotive sector."

According to the president and director, L Ramkumar, the company's export earnings are around Rs 40 crore. "Many companies in the west are looking at India for sourcing the belts. We are contract manufacturers for some original equipment manufacturers in Europe." He also said China is not a major threat for the domestic players. "We are exporting belts to China. This year we will be talking to original equipment makers there."