The Hindu Business Line : Continental Engines in pact with DaimlerChrysler co

CONTINENTAL Engines Ltd, a manufacturer of engine components, has entered into a licence agreement with V.M Motori (VMM) of Italy, a DaimlerChrysler Group company, to manufacture engines in India.

The licence agreement covers transfer of technical knowhow for a modular one cylinder and two-cylinder engine. According to Mr Alok Dutta, CEO, Continental Engines, VMM would provide all technical assistance needed to develop the components as per their specifications in India and enable manufacture of the engines.

The agreement states that VMM intends to source cylinder heads and other aluminium components for its own requirement. Also, the agreement envisages a licence fee payable in stages and a royalty per engine extending up to five years from the date of commencement of production.

Continental Engines is in the process of establishing an assembling unit for the new engine at Bhiwadi (Rajasthan), where its current facility is located. The assembly plant will have a capacity of 15,000 units per month and will require an investment of about Rs 4-5 crore. "The engine can be used for smaller vehicles such as two- or three- wheelers, and generating sets," Mr Dutta said.

Continental Engines had been scouting for a partner to source technology for small engines to enable it to gain a competitive edge in the domestic market. According to Mr Dutta, this tie-up would be a major step forward since the business would go up the value chain from engine components to complete engine assembly. Further, once manufacturing of this engine is commissioned, the company would explore the possibilities of adding further models from the VMM range.

Continental Engines registered sales of Rs 125 crore last year, with exports accounting for about 80 per cent.

VMM was acquired by Detroit Diesel Company of USA in 1995, which in turn merged with DaimlerChrysler in 2000. The company produces over 100,0000 engines per year and has a turnover of about 300 million euros.

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