Spanish duo bets big on India as hub

Industrias Del Recambio, the wholly-owned Indian arm of the Spanish parent, will soon shift operations from Coimbatore to Sipcot in Uragadam near Chennai. The total cost of the project is Rs 15 crore and the factory will become operational in January 2007, said M Radhakrishnan, joint managing director. The 60,000 square-foot plant will make 'control arm' sub- assemblies and export them back to Spain.

Twinstar Metal Products, another 100 percent arm of the same Spanish company, operates out of the special economic zone in Chennai and makes components for control arms. These are exported to the parent as aggregates to the tune of about 45,000 units per month.

Industrias Del Recambio then assembles these with other parts sourced from countries like Taiwan to deliver subassemblies to passenger cars and utility vehicles in the US and Europe aftermarket. Twinstar also manufactures adjustable props and scaffolding pans for the construction industry and again exports these to Spain.

With its two Indian subsidiaries firing on all cylinders, Industrias Del Recambio now plans to source complete subassemblies in a ready-to-fit condition from India, said managing director, Inaki Soto. The Indian arm will import a few components like ball joints and rubber parts. The control arm is them assembled and exported back to the parent company, he said.

Apart from the machines that will be brought in from Coimbatore, the new plant will also have robotised welding, CNC machining centres, a full-fledged tool room, press shop, paint booth and electro-deposition facility. According to Soto, the initial capacity will be 50,000 control arm subassemblies a month which will be ramped up based on the parent's needs.

Industrias Del Recambio has also received orders from Ford Motor Company in the US to supply components like engine parts beginning this month. It is also in talks with a couple of European and North American carmakers. India will also source parts like forgings and castings and export them to Spain, he added. The Coimbatore plant supplies to the likes of LMW for its textile component needs.

Twinstar, in turn, is exploring the option of making sheet metal parts for the local market. It has already kicked off talks with some car and two-wheeler manufacturers. Soto said that Industrias Del Recambio has now floated a 50:50 joint venture in India with another Spanish company (Caucho Metal Productos SL) styled Caucho Metal Products to make under chassis parts.

For the record, the parent meets the requirements of General Motors as well as Tier-1 companies like Benteler, Castellon, Delphi, Tenneco and TRW. It has four plants in Spain and one in Brazil in addition to a commercial office in Germany. Since Twinstar will shift control arm manufacturing to the new plant, the space will be used for Caucho to make under chassis parts. It will begin by making bushes and few sheet metal components.

When fully operational, the Indian facility will churn out a family of under-chassis parts like hydro bushings, shock absorber mounts, suspension link mounts, bumper parts, strut mounts and body sub-frame parts. The equity base for the new joint venture is Rs 3 crore and operations will synchronise with the Chennai plant. India will play a big role for both the Spanish companies. "The cumulative sales of the two subsidiaries and the joint venture will be more than those of Industrias Del Recambio of Spain in four years. Over time, the Indian companies might become the hub for the parent," Soto said.