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K. Giriprakash

Bangalore , Feb. 3

MICO-BOSCH has drawn up a game plan for its common rail diesel systems where the first year sales are expected to be 40,000 and the payback period expected to be between five and six years.

According to industry sources, once Mico starts manufacturing CRDi systems in India from 2006, the demand in the Asian region will shoot up with incremental cost coming down by 15 per cent to 20 per cent. This would lead to higher than expected sales resulting in doubling its sales in the next two to three years. Mico also expects its exports to grow at 30 per cent CAGR till 2006, while the export contribution to total sales is expected to grow from 15 per cent to about 20 per cent by 2006.

Though Mico did not specify the time for the pay back period, it said the company will be able to offer the latest CRDi systems at attractive prices. Incidentally, the German-based Bosch Group has become the leading automotive supplier in the world with its sales turnover increasing 10 per cent in 2004 to 40 billion euros (Rs 22,000 crore). Most of this growth was driven by markets outside Germany.

Bosch has committed an investment of Rs 1,000 crore in India for application, testing and manufacturing of common rail systems. According to Bosch, it will continue to focus more on Asia and the Americas.

Analysts said the CRDi systems would cost at least 20 per cent more than the electronic distributor pumps.

Though the incremental cost of shifting from petrol to imported CRDi system is now at about Rs 80,000, once they are manufactured locally by companies such as Mico, the price differential will narrow down by 15-20 per cent.

Out of the Rs 1,000-crore investment, Mico has earmarked about Rs 550 crore towards production of common rail diesel injection system while about Rs 150 crore will be invested every year over a period of three years in other projects, including expansion of the Jaipur plant which makes distribution pumps. Bosch now invests around 25 million euros (Rs 140 crore) every year in its Indian operations.

Analysts say that the market for diesel passenger vehicles is growing rapidly in India.

During 1998-99, the share of diesel passenger vehicles was around four per cent but since then it has grown to 25 per cent due to availability of highly fuel efficient and higher torque new generation cars.

Hence, Mico will have a first-mover advantage in the industry.

The percentage of diesel cars to the total passenger cars in India by 2010 is expected to be around 45 per cent.

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