MUMBAI: Tata AutoComp Systems Ltd, in which Tata Motors holds a 26 per cent, will spend Rs 3 billion capex in FY11 to expand production as automakers battle a severe capacity shortfall, a senior official said.

 

The firm will invest the money to add new plants in India, quality improvement and upgrade its technology, R S Thakur, chief executive officer, told reporters on Friday.

 

"It's true that capacities are stretched. There is a great (auto) boom in the country, which nobody had anticipated at least in the components industry and components people including ourselves were playing safe," he said."

 

"It is causing problems for us and them (automakers) and we are planning to resolve it." Overstretched balance sheets and thin margins have made autoparts makers averse to spending hugely on adding capacity, which they have to do if they are to remain competitive in a rapidly changing market scenario.

 

Tata AutoComp is setting up 5 factories in Sanand, Gujarat where Tata Motors has set up its hub to manufacture the world's cheapest car Nano.

 

Thakur said Tata Autocomp, which counts Fiat, Ford Motor, General Motors, Volkswagen, Ashok Leyland and Eicher as clients, supplies nearly a quarter of the components material for the Nano.

 

"We will try and persuade them to give us more business (for Nano)," Thakur said. The components maker is in talks to supply components India's top car maker Maruti Suzuki India and Hyundai Motor, whom it does not count as customers currently, Thakur said.