Financial Daily from THE HINDU group of publications
Thursday, Aug 19, 2004
Financial Daily from THE HINDU group of publications Thursday, Aug 19, 2004 |
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Corporate
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New Projects Wheels India to set up new plant in Haryana — Maruti to be primary customer
M. Ramesh
Chennai , Aug. 18 WHEELS India Ltd, a TVS group company, plans to put up a plant in Haryana to manufacture wheels for passenger cars. This plant will primarily cater to the requirements of Maruti Udyog Ltd. Talking to Business Line after the company's annual general meeting today, Mr S. Ram, Chairman and Managing Director, and Mr Srivats Ram, Executive Director, Wheels India, said that land for the plant had been acquired. Wheels India would invest about Rs 15 crore in the facility, which would have a capacity of about 1.25 million wheels. The plant would begin production in the second half of next year. The facility in Haryana, quite close to Maruti's plant in Gurgaon, will help Wheels India in that it will save on freight cost that it now incurs on supplying to Maruti. Haryana has introduced value added tax (VAT) and this would also benefit Wheels India, they said. Mr Ram said that Wheels India was also considering the possibility of putting up a plant in Jamshedpur. However, a decision on this was yet to be taken. This facility, to manufacture truck wheels, would help the company in two ways - it would be close to the source of raw material (steel) and to a major customer (Tata Motors). Wheels India would thus save on freight on both sourcing the raw material and supplying the finished product. Earlier, Mr Ram told the shareholders that steel prices had increased by more than 50 per cent last year over the previous year. Wheels India had obtained compensation for this increase from the original equipment manufacturers (OEMs) to which it supplied wheels. To counter the high increase in steel cost, the company was investing in manufacturing lines to reduce material intensity of its products in the coming years. It would invest on manufacturing speciality wheels, including spun aluminium wheels, he said. Mr Ram said that he expected the high growth in sales seen in the first quarter of the current year to taper off in the second half of the year. This, he said, would be as a consequence of the increase in diesel prices, which would dent the profitability of truck operators. Answering a question, he said that Caterpillar of the US has asked Wheels India to look into the possibility of supplying to its upcoming plant in China. Wheels India, finding that China has about 80 wheels manufacturers, is examining the possibility of taking over one of them. Wheels India's China strategy depended on Caterpillar's plans for the country.
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