Auto components company Avtec Ltd, which supplies engines to General Motors Corp. and Ford Motor Co.’s local units, said it was spending up to Rs100 crore in building a factory in Kharagpur, West Bengal.

The unit will supply engine and transmission components for the Rs1 lakh car that Tata Motors Ltd, the country’s largest auto maker by revenue, proposes to roll out next year, said Sudhir Rao, chief executive of Avtec. Rao declined to give details on how the company would raise the Rs100 crore needed for expansion.

Supply order: Avtec chief executive Sudhir Rao said the company will supply engine and transmission components for the Rs1 lakh car that Tata Motors Ltd proposes to roll out next year.

Avtec—which is 49% owned by Hindustan Motors Ltd, the makers of the Ambassador car—will start making components for 150,000 cars a year and for 35,000 other types of vehicles, Rao said.

Tata Motors is building a factory in Singur, West Bengal, to make 250,000 cars a year, starting 2008, and hopes to make as many as a million cars a year eventually by farming out assembly to other factories in the country.

As many as 40 vendors are building factories in Singur exclusively for the small car project, and Tata Motors has promised many vendors that they would be its single source for components for five years from the start of production if they continued to meet cost and delivery norms.

Rao didn’t say if he was a single-source vendor for the Rs1 lakh car.

Avtec is also talking to small auto component firms, with sales of around €30-50 million (Rs167-279 crore), in Europe and the US for acquisitions, Rao said.

Avtec, which had revenues of Rs570 crore in 2006-07, wanted to acquire these companies for design expertise and technology, he added.