Auto ancillary manufacturer Lumax Group is planning to expand its production capacities at two key facilities in Gujarat and Haryana this year. With revival in demand for passenger vehicles, the Gurugram-headquartered entity is now finalising the blueprint to match upcoming surge in sales, a top executive said.
With leading auto-maker Maruti Suzuki gearing up to increase car production from its Gujarat plant this year, Lumax would be required to augment its capacity in the region. Further, a positive outlook for the overall passenger car market in the next fiscal year encouraged the firm to move ahead with its plans, said Vineet Sahni, group CEO, Lumax.
Currently, it supplies to a fleet of car and two-wheeler makers like Tata Motors, Honda Motorcycle & Scooters, Bajaj Auto and MG Motors in the region. And Sahni expects demand to grow steadily in coming quarters.
“Since the festive season, demand for passenger cars and two-wheelers have shown steady growth and we expect the momentum to continue in 2021. A number of orders will see fruitation in coming months and expansion of capacity is required”, he said.
Sahni declined to reveal the capex for the plan, saying it will be in line with its last round of investments. Set up in 2017, Lumax had made an initial investment of Rs 120 crore in the Gujarat facility.
Further, its proposed facility at Bawal (Haryana) that got stuck due to the outbreak of the COVID pandemic last year will be finished this year. Focused on producing electronic components, construction work at the Bawal facility has resumed and the plant will be ready by April, said Sahni.
With the addition of Bawal facility, the group will have 33 facilities across eight states, employing 9,000 staffs.
While the initial impact of the pandemic and the lockdown impacted its sales during the first three months of 2020-21, Sahni says, Lumax has managed to cover some ground in the past few months. “The first quarter was a total washout, which would have reflected a 25 percent decline in topline. But we now anticipate that total revenue for 2020-21 will be 16 percent lower than the previous year”, he said.
As sales of entry-level, premium hatchbacks and two-wheelers with capacity of less than 150CC are on the rise, better demand is expected to improve its revenues in 2021-22. According to Sahni, by March, 2022, the Rs 2,900 crore group may manage to regain the topline number for 2018-19, when the slide in auto sales began.