Mico integrates Indian subsidiaries with global biz
Auto parts’ maker Bosch has reorganised all its subsidiaries in India to integrate them with its global businesses.
In another development, most of Mico plants will now be global hubs or lead plants for some of the products they make.
“We have reorganised the structure so that there is more focus on each of the segments of our businesses,” Mico’s Joint Managing Director, Dr Ferdinand Allerkamp, told Business Line. He, however, pointed out that there will not be any changes in the legal status of these subsidiaries.
They will continue to be separate entities but for better synergies as well as for cost savings, they will work in conjunction with their Bosch counterparts in other countries.
The Jaipur plant of Mico which manufactures about 5 lakh units of distributor pumps every year will now be the lead plant for this product globally. Plants in Japan, Brazil and some in Eastern Europe are the others which make these pumps in small numbers.
For injectors, the Nashik plant will be the lead plant. In value terms exports of these products from these lead plants during 2007 will be about 18 per cent of the total sales worth around $1 billion.
Dr Allerkamp said typically, relocation of a product’s manufacturing lines to low cost sites can lead to savings between 12 per cent and 17 per cent for a European manufacturer. Dr Allerkamp said after integrating the subsidiaries with global businesses, there will be huge savings in terms of costs as well as manpower.
A HDFC Securities report points out that India is the only Bosch company where multi-cylinder pumps are produced in such large numbers.
Mico has large capacity and production volumes in this product and thus it makes economic sense to shift the production of these products away from developed countries.
The report says that even on the domestic front, Mico can take advantage of the economies of scale for certain of its products. It said that auto manufacturers typically have a single source supplier for injection systems, locked in through the life cycle of the engine platforms.
Consequently, most diesel vehicles on the road run on engines using Mico’s diesel systems.
Therefore, there exists a large, growing and profitable aftermarket, the leadership of which is enhanced with the tremendous distribution network built up over the years. “This in turn results into better economies of scale and better-cost structure,” the report said.
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