Financial Daily from THE HINDU group of publications
Tuesday, Jun 22, 2004
Financial Daily from THE HINDU group of publications Tuesday, Jun 22, 2004 |
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Corporate
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New Projects Tecumseh India to set up rotary compressor unit M. Somasekhar
Hyderabad , June 21 TECUMSEH Products India Ltd (TPIL), a 100 per cent subsidiary of $2-billion Tecumseh Products Company (TPC), US, will set up a modern plant at its Hyderabad facility to manufacture rotary compressors in India mainly to reach exports markets. The commercial production is expected to commence during March-April 2005. The initial exports would be targeted at West Asia, where the company is strengthening its market presence, according to Mr Vipin Sondhi, Managing Director, TPIL. The funds for the rotary compressor unit would be raised from internal accruals and debt from banks and financial institutions. With the total investments for this plant, which Mr Sondhi held back for `strategic' reasons, TPC would have completed $100 million investments in India, as announced a couple of years ago, he said. The rotary plant would be producing about 500,000 units a year and would expand to 1,000,000 if the anomalies were corrected in the duty structure. They would cater to the 1.5 tonne and 2 tonne segment which constitutes almost 90 per cent of the market, Mr Sondhi told Business Line. TPIL has two modern manufacturing facilities — in Hyderabad for air-conditioning compressors and Ballabgarh for refrigeration. Setting up a plant to make the scroll compressors by 2006 will be the next milestone in India operations, Mr Sondhi said. At present, compressors are made using three technologies servicing the air conditioning industry namely reciprocating, rotary and scroll. The reciprocating is made by two manufacturers in India - Kirloskar and Tecumseh India. Tecumseh is the only company in the world having all the three technologies. In India, it will be the only company to make rotary compressors as well as the other two technologies, he claimed. The rotary compressors are gaining ground rapidly with 60 per cent of the Indian air conditioner industry importing them while about 20 per cent of the Gulf market is using rotary, whereas in the South East Asia and China almost all the compressors used are rotary. The air conditioner market is growing at 15 per cent a year in India which is quite healthy though the growth potential is much higher, the TPIL Managing Director said. Asked about the performance of its refrigerator compressors plant in Ballabgarh, Mr Sondhi said "The refrigerator industry has been almost stagnant for 4 years so and we are being challenged. We are reworking our strategy with a focus on exports." The company's exports are focussed to West Asia, Korea, China, Turkey, Pakistan Bangladesh etc. where the Indian built compressors are displacing the Bristol compressors from the US. Mr Sondhi explained that the Chinese are now targeting the West Asian market and would like to use the robust reciprocating compressors from Tecumseh India. "We expect good growth from this market. From a sale of about 100,000 in 2004, Tecumseh will reach a sale of about 200,000 by 2006," he said. Exports accounted for about 28 per cent in 2003 and will grow to over 35 per cent in 2004 of TPIL's total sales of both plants put together, he said. He explained that the anomalies in the duty structure and raw material needs to be rationalised to give a further boost to the growth of the sector as well as domestic manufacturers. At present, the duty on compressors was higher than the raw material for making the compressors such as copper and steel, making it easy for competition from overseas markets.
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