Tatas To Invest Rs 3,500cr In Auto Ventures
The Tatas will invest between Rs 3,000 and Rs 3,500 crore to promote a slew of companies to supply components to their venture to manufacture a small car, scheduled to hit the country's roads next year.
The firms will be promoted by Tata Autocomp Systems Ltd (Taco), a company promoted by Tata Industries.
Taco will be the holding company and will, in turn, promote 50 joint venture companies which will develop technology and manufacture components that meet international standards.
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The project will have a 1:1 debt-equity ratio and the group is planning an initial investment of around Rs 2,000 crore.
The venture will have a two-tier structure. The first tier will consist of companies that are mostly 50:50 joint ventures with global auto ancillary leaders, which will focus on technology absorption, design, engineering and indigenous research and development.
The second tier will consist of manufacturing ventures with mainly Indian partners. Tata sources said that some foreign partnersmay also be roped in.
Investment in each of these companies will be between Rs 100 and Rs 150 crore and each of these companies will employ around 200 workers.
The turnover of each is expected to be around Rs 300-Rs 500 crore and the gross domestic sales for the Taco companies is expected to be around Rs 5,000 crore with exports bringing in another Rs 3,500 crore.
The Tatas and the joint venture partners will be equally represented on the boards of these companies with 100 manufacturing units in Madras, Pune Delhi and Bangalore.
The companies expect to supply the products to Telco, which is planning to produce around 300,000 passenger vehicles and 200,000 of commercial vehicles by the year 2,000.
Besides, with partners which are global suppliers to most of the major automobile producers, Taco hopes to get substantial business from their domestic ventures.
Taco has already signed agreements with Johnson Controls Inc, New Venture Gear and ITT of the US; Yazaki, NIFCO, Toyo Radiators, Hitachi and Chuo Hatsujo of Japan in addition to Sommer Allibert of France and ZF of Germany.
The Rs 7,000-crore auto component industry in the country is currently controlled by 5,000 small operators and the Tatas are looking to rope in some of these players as partners.
With the global auto focus shifting to India, the ancillary business is poised to expand at least three- to four-fold to Rs 25,000 crore over the next five years.
Ratan Tata felt that with the sector poised for growth, the Tatas could play a vital role in getting the much-needed foreign technology for the industry,'' the Taco source said.