SMEs in auto component sector need to increase investment, focus on quality

In an exclusive interview with SME Times, Anadi Sharma, President Marketing, G S Auto International Ltd. said that SMEs  in the auto component industry are not willing to  invest much for enhancement of their product quality and such an attitude is hindering their growth.

Excerpts of the interview...

What is your opinion about spurious products available in the market?

Anadi Sharma: We have seventeen different product categories. Whatever production we do, there are 50 times spurious parts business in the market. In my one category almost 200 times are spurious products.

How are you tackling the situation?

Anadi Sharma: Certainly, we are dealing with the situation. It is very difficult. What we do is we make people aware on good product and from where they can buy the good product. All bad products are available everywhere but good products are available in a particular shop. That is the only step you know.

Do you witness any competition from China in this regard?

Anadi Sharma:  China fakes differently and India fakes differently. No good manufacturers are faking products in India. All low level players are making copy parts here. However, in China, all big manufacturers fake parts. Challenges are there with China. There is competition but not now. After five years time, we do not know what will happen. But the government is also adding some duties to Chinese goods and all that will obstruct things.

How do you see the export market at the moment especially in the aftermarket segment?

Anadi Sharma: It is ok for us. Export has good potential. Our focus market is Europe and the South America. The EU debt crisis is not affecting us in a big way. In fact, we are making more money in terms of euro.

We are exporting and my price remains the same. For instance, half euros I am getting more rupees so I am comfortable and I am happy. But the debt crisis is bad for everyone in the long term. For the industry it is very bad. We want our buyer to be very happy and successful. They should make money. If they are not making money and the country is not successful then it is bad.

Are you looking for some alternative markets besides the Europe and South America?

Anadi Sharma:  Not exactly. In fact, America is too bad. In fact, Middle-east, they want cheaper parts. And, we are quality manufacturer.

Any plan to make your pricing flexible for these new markets?

Anadi Sharma: As I have told you, we are quality manufacturer and our price tag is not higher but it is right for that kind of parts. People buy at cheaper price something else which look like the original thing but it is not original. Customers can only understand on the quality. The quality speaks on its own.

What is the present turnover of the company?

Anadi Sharma: Our present turnover of the company will be Rs. 150 crore in 2011-12.

Any kind of R&D initiatives you are putting in place?

Anadi Sharma:  We have a R&D center in our factory at Ludhiana. Our company works from there. In another six months, we will set up the R&D facility. We are in process at the moment.

Are you importing technology to India?

Anadi Sharma:  Not yet but now we will be importing. We will be registering AdBlue, which is used for Euro 4 that is commercially sold. Resonova and G.S . Auto are jointly setting up unit. The total investment in 10 years down the line seems to be 10 million euros. Initially, we will invest around 2-3 million euros. By June - July, we are likely to set up.

Could you tell me what kind of products you are manufacturing?

Anadi Sharma: We manufacturer Suspension Components ( Machined, Forged and Cast )  for Commercial vehicles (LCVs,  MCVs and HCVs ). We have bushes, pins, side cutter, nut bolt, teeth etc.

What is your take on SMEs and could you highlight on the challenges?

Anadi Sharma: SMEs face major challenge in quality and investment as most of the SMEs do not want to spend money as they feel there may not be good return. They want to have better pricing first then they want to sell. In fact, until they produce well and do not have good machinery they do not have good prices.  It is a cycle and most of the companies get into this cycle.