State of the Economy 2019

Braving Adversity

Auto ancillaries and manufacturers in Chakan remain cautiously optimistic of demand uptick despite local challenges and sluggish sales

Photographs by Amey Ghatge

A metallic thudding reverberates through the shop floor as we enter Autocomp Corporation’s plant in Chakan, Pune. Workers, dressed in blue uniforms and helmets, go about their task with rhythmic precision, as the assembly lines chug along. Amid the cacophony, Rajeev Panse, managing director, tells us with a tinge of pride that their business grew by 28% in FY18 — operating income for FY17 was Rs.3.46 billion. The company, established in 1983, makes ancillaries including metal body parts, assemblies, chassis and seating structures for big automakers such as Tata Motors, Eicher Motors and Ashok Leyland. “We are growing faster than the industry,” adds an upbeat Panse. 

Autocomp is just one of the many ancillary firms housed in Chakan. Located about 30 km from Pune, this town has one of the biggest auto clusters in India. Spread across 8,500 acres, the cluster houses about 650 micro, small and medium-sized enterprises. Further, business here is bolstered by the presence of larger auto ancillaries, including Lumax Industries, Spark Minda and Varroc Group, as well as auto giants such as Ashok Leyland, Bajaj Auto, Mercedes Benz and Mahindra & Mahindra.

Take for instance Mercedes-Benz, which has had a plant in Chakan since 2009. “We have an aggressive localisation strategy, and we locally produce nine key models including the Mercedes Maybach S 560, S-Class, Long Wheelbase E-Class, C-Class, CLA sedans and the GLA, GLE, GLS and GLC SUV from our Chakan plant,” says Martin Schwenk, MD & CEO, Mercedes-Benz India.  The production facility has seen an investment of Rs.22 billion and has the largest installed production capacity for any luxury carmaker in India.

“Presence of larger automakers means that their knowledge and expertise are transferred to their supplier base,” states Amit Dhole, director of United Gaskets and Components (UGC). The company, which has a turnover of Rs.400 million has been operating out of Chakan since 1994. 

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