Comstar bags Rs 125 crore Ford business

Exports and assembly units in overseas locales are the next big growth driver for component makers in India. In line with this trend, Comstar Automotive Technologies (earlier known as Visteon Powertrain Control Systems India before Visteon exited the business) has bagged one of its largest export orders since inception worth Rs 125 crore. The business involves supplies of an annual volume of 600,000 units of starter motors to Ford Motor Company in North America.

Supplies have commenced in January from Comstar’s manufacturing plant in Chennai and will be delivered from the component maker’s North American warehouse near Detroit to ensure ‘just in time’ supplies to the carmaker. The new starter motors will be assembled by Ford in multiple countries including USA, Canada, Mexico and Venezuela. They will be fitted on Ford’s Taurus saloon, Edge and Flex SUVs, as well as in Ford’s Lincoln division which rolls out the Lincoln MKS and MKZ saloons and MKX SUV.

With this order, Comstar’s annual starter motor volume will touch 20 lakh units catering to the passenger car and commercial vehicle markets. Comstar is already a major supplier of starter motors and alternators to OEMs like Ford, Volvo, Tata Motors, Jaguar, Aston Martin, Mazda and Ashok Leyland-Nissan. The company is now aggressively working towards expanding its global footprint as well as developing advanced technologies for the emerging markets, according to Sat Mohan Gupta, director.

The next overseas destinations on its radar are the growing markets of China, Russia and Brazil. The company is currently exploring the setting up of three production units for starter motors and alternators in China, Brazil and North America over the next three years. These will be set up either as joint ventures or independently to cater to passenger car and LCV OEMs.



China programme

The company has already entered into a memorandum of understanding with a local Chinese component player for floating a joint venture for producing starters and alternators. The joint venture is expected to be firmed up within the next three months. Comstar also holds a technical license for providing design and manufacturing expertise to the Chinese supplier for supporting Volvo Cars after its acquisition by Zhejiang Geely Holding Group Company, the fastest growing car maker in China.

While Comstar directly supports Volvo and Ford globally, Ford Changan, a joint venture between Ford Motor Company and Chang’an Motors in China, is serviced by its Chinese partner. This supplier has been unable to meet the requirements of the expanding Chinese automotive market individually and hence the proposed joint venture that will service the China, Taiwan and Hong Kong markets. After the JV is set up, Comstar will target not only Volvo and Ford but other automakers in China.

“For entering the Chinese market, you need a local partner. Brazil is a new territory for us so we want to move forward cautiously and are scouting for a local partner there. We are also exploring the possibility of independently setting up an assembly unit in Detroit for General Motors and Ford USA. This will enable us to remain in close proximity to our customers. We will invest around $ 10 million, through a mix of internal funds and borrowings, in setting up the production facilities in the three overseas markets,” Gupta told Autocar Professional.

The establishment of the overseas facilities would scale up Comstar’s customer base. Besides, India does not have a Free Trade Agreement with Brazil at present and the company would have to shell out duties in the Brazilian market without a local partner to remain competitive.

Comstar is working on potential businesses in North America with Ford and if these fall into place, it could warrant establishment of an assembly unit in the region.

Meanwhile, Comstar has also identified a potential partner in Russia who produces starter motors and alternators. Discussions are currently underway for a prospective joint venture. Moreover, all potential customers like Ford, Renault, Volvo and AvtoVAZ, a leading Russian vehicle manufacturer, are based in the region.

These OEs are scouting for a local supplier with advanced technologies and in its absence may bring their own vendors to Russia for meeting their component requirements. This is mainly because local suppliers lag behind in advanced technologies as the Russian automotive market is still not as developed like Europe's.

However, Comstar has bypassed Africa from its immediate global expansion plans. This is due to the fragmented nature of the African market with limited OE presence in the region. Ford has a setup in Africa but that is still in a nascent stage. While big future opportunities exist in Africa, at present there are only small countries with numerous issues in that geography, feels Gupta. In the long term, Comstar plans to move out some of its export operations from India to its Chinese, North American and Brazilian plants for servicing its overseas customers. The growing automotive potential in Indonesia could also be tapped in the future, out of China.

The company is predominantly export-oriented with 80 percent of its revenues accruing from its foreign businesses since its inception in 1998. It bagged orders from Tata Motors in 2007 and has since been growing its portfolio with the OE. Recently, it opened its account with the Ashok Leyland-Nissan joint venture, winning an order for supplying about 2,500 starter motors monthly for the Dost LCV.

Gunning for new business with OEMs

Comstar commenced supplies of its new start-stop starters for the first time for the 2-litre diesel-engined Volvo cars in Europe last June. The second order for the next-generation start-stop technology will commence this October for Volvo Europe’s 1.6-litre petrol-engined cars. Volumes of about 25,000 units annually are being envisaged. The company is also in technical and commercial discussions with BMW and Audi globally for start-stop technology. The start-stop starter works on the premise that a vehicle normally switches off at a red light, directed by the engine control module. When the traffic light changes to green, the vehicle does not require a key start but a simple release of the clutch or brake pedal that springs the engine back to life. The benefits of this technology are faster cranking, less noise in re-starting the car, and, of course, improved economy.

Meanwhile, Comstar has bagged a new order for starter motors for the Tata Nano as the carmaker has incorporated changes in the car’s engine. Supplies of about 10,000 to 15,000 units per month are slated to commence from March.

In sync with Tata Motors for the Nano

The company is also developing a small start-stop starter for the Nano, initially for the petrol version to be followed later by the diesel edition. Its highlight will be its weight and performance. Comstar will also be the starter motor supplier for the 794cc diesel-engined Nano to be launched in March 2013 as well as for the larger 1-litre petrol-engined Nano slated for rollout in end-2013.

Comstar claims that it has bagged over 70 percent of Tata Motors’ requirements for passenger cars, due to its lower pricing, quality and product design. At present, Comstar starter motors constitute 60 to 70 percent localisation content in terms of critical components with the balance being imported.

The forthcoming list of potential customers for Comstar includes Maruti Suzuki and Volkswagen with whom it is working on many new applications for starter motors and alternators for the Indian, Brazilian and European markets. It is also eyeing the second-source status with Maruti for starter motors and alternators for existing models.

Early discussions are underway with Hyundai Motor India for supplying starter motors for all models of the carmaker. At present, Hyundai imports a few models of starters from Korea with the rest sourced locally.

“We will explore the option of establishing a second manufacturing facility in the West region, if we bag these orders. Initially, though, we can commence supplies from our Chennai facility and later add a new production line elsewhere for about a million units. Investment is not an issue,” commented Gupta. The Chennai facility has a production capacity of 3.8 million starter motors and 1.1 million alternators per annum.

The prospective locations are either at Sanand in Gujarat or at Pune to be within close proximity to customers. Tata Motors is already located at Sanand and Ford has also announced its plans for establishing its engine plant and manufacturing facility there. Peugeot too has also announced its new plant at the same location. This could tilt the scales in favour of Sanand.

With the new products and orders in its kitty, Comstar is optimistic of touching a topline of Rs 400 crore by 2012-13 and notching Rs 350 crore by the end of March 2012. In 2010-11, it had clocked a turnover of about Rs 296 crore.

FAST FACTS

• Comstar’s starter motors are to go on Ford’s Taurus saloon, Edge and Flex SUVs, as well as Lincoln MKS and MKZ saloons and MKX SUV.

• Comstar has entered into an MoU with a Chinese component maker for a JV. • It has begun supplies of start-stop starters to Volvo Cars in Europe. It is also in talks with BMW and Audi globally for the same.

• Has bagged Tata Motors' order for starter motors for the Nano. Supplies of about 10,000-15,000 units per month are slated to commence from March 2012.

• Comstar is developing a small start-stop starter for the Nano, initially for the petrol version. Starter motors are also to be supplied for the 794cc diesel Nano slated for a March 2013 launch.

• Also notified as the starter motor supplier for the 1-litre petrol Nano planned for rollout by end-2013.

• Recently bagged order for supply of 2,500 starter motors every month for the Ashok Leyland Dost LCV.

Shobha Mathur