The slowdown in the auto industry, especially in passenger cars, has forced auto component maker Rane to scale down its Rs 280-crore capital expenditure (capex) plan for FY12 by up to 40 per cent.

“We will end up spending only 60 per cent of our planned investments. We will slow down or even defer passenger car related investments this year,” said Mr L. Ganesh, Chairman, Rane group.

Couple of months ago, the company commissioned a steering gear assembly plant at Sanand, exclusively for Tata Nano. The 3-acre plant, at full steam, can do up to a million gears a year. But currently it supplies only around 3,000 units a month. “With Nano volumes not picking up, we haven't ramped up,” said Mr Ganesh, adding that the plant may look at catering to other companies' needs as they set shop in Sanand.

Trouble

Rane's electric power steering plant in Bawal, again an exclusive supplier to Maruti, is doing “very badly” due to the strike at the car major. “We had doubled capacity at the plant last year. But now, it is not even doing 1/3{+r}{+d} of the initial capacity.”

Plants in Chennai, which cater to the requirements of Maruti and Tata Motors, are also not performing to peak capacity. “Barring the brief festival season, passenger cars will continue to have a bad second half, unless interest rates soften,” said Mr Ganesh.

In domestic OEM sales, passenger cars account for 40 per cent of Rane's turnover; commercial vehicles contribute 25 per cent and two-wheelers 5 per cent.

Different Bet

The company is betting on commercial vehicles and two-wheelers to shore up fortunes. Much of the investments this year will go into capacity building in these two segments, “which have been holding up,” said Mr Ganesh.

Commercial vehicle parts are made in Chennai, Trichy, Hyderabad and Uttarakhand; two-wheeler components are manufactured at the plants in Chennai, Trichy, Hyderabad and Puducherry.

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