The Hindu Business Line : MICO to invest Rs 800 cr in 2 yrs; Bosch Rs 500 cr

The game plan
Rs 200 crore will be invested in the two plants in Bangalore, Rs 600 crore will be invested in the Nashik plant.
First of the locally assembled common rail diesel systems (CRDi) to roll out later this year.
Depreciation charges to taper off after 18 months.

Bangalore , March 9

Auto parts maker, MICO will invest Rs 800 crore this year and the next while its parent, Robert Bosch will invest Rs 500 crore to expand its operations in the country.

MICO's Joint Managing Director, Mr V.K. Viswanathan, told newspersons on Thursday that around Rs 200 crore will be invested in the two plants in Bangalore, while Rs 600 crore will be invested in the Nashik plant during this year and the next.

"We will fund these investments through internal accruals," he said.

Mr Viswanathan, who will be taking up an assignment with Robert Bosch in North America next month, said MICO's parent Bosch will invest another Rs 500 crore in various operations of the company in the next two years. Robert Bosch will also hire 1,000 more engineers this year for its software business, Robert Bosch India, Mr Viswanathan said.

He said first of the locally assembled common rail diesel systems (CRDi) will roll out of the factory later this year. The company expects over 50 per cent of its revenues to come from new technologies like CRDi systems.

High depreciation charges

Mr Viswanathan said the 8.5-per-cent decline in net profit during 2005 to Rs 343 crore was largely because of higher depreciation charge in that year as the company had invested in capacity expansion and for newer technologies.

He said the depreciation level in 2004 was around Rs 100 crore which went up to Rs 200 crore in 2005 and it would be the same during the current year too.

However, this would taper off in the next 18 months, he said.

The company's sales grew 28 per cent to Rs 2,978 crore while the total turnover, including other income was around Rs 3,103 crore, which was around 27 per cent higher than the previous year.

Contribution from sale of auto parts was up nearly 28 per cent to Rs 2,747 crore. Profit (before interest and tax) from automotive products declined marginally by 2 per cent to Rs 494 crore.

In 2005, MICO's investments in the automotive products increased 279 per cent to Rs 375 crore. Mr Viswanathan said operating costs were higher last year as material costs, including crude oil prices had gone up.

MICO has declared a dividend of Rs 12 per share, which is 20 per cent higher than the previous year.

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