The Hindu Business Line : Hyundai vendors may set up units near Chennai

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Chennai Jan. 29 Hyundai Motor India expects 30 of its vendors to set up manufacturing facilities near its plant at Irungattukottai, about 40 km west of Chennai. A majority of them will come in on their own and the others through joint ventures, according to Mr H.S. Lheem, Managing Director, Hyundai Motor India Ltd.

These vendors would be ready to supply components to Hyundai Motor India by the time its second plant begins production.

Some of them have begun construction work on their plants and some would start full operation by April as they have to supply parts for the new car - a "twin model of the Santro" - to be launched later in the year, he told Business Line.

The company is setting up a second plant with a capacity of 3-lakh units at an investment of Rs 2,200 crore (about $500 million). Construction work on the plant has been completed and installation of production equipment is going on. The plant will start producing cars by mid-October. While announcing the second plant, Hyundai Motor India has said its suppliers would invest about Rs 450 crore ($100 million).

Mr Lheem said the vendors would supply rubber parts, switches, body panels, and plastic injection parts, most of which are now being imported. One of the suppliers that is setting up a plant here is Korea Chemicals, which would supply paint for the second plant.

Hyundai Motor India's second engine and transmission plant with a capacity of 3.5-lakh units would be ready by September 2008. Its first engine and transmission plant too has a capacity of 3.5-lakh units. Last year, it exported 50,000 units from this plant, of which 48,000 went to Korea - 1-litre and 1.1-litre engines - to be fitted on Kia Picanto cars.

Accent production

To a question, Mr Lheem said Hyundai Motor India would continue to produce the Accent, its entry-level mid-size sedan, even though it recently launched the Verna in the same segment. The company is also exporting the Accent and has an export backlog of 600 units, he said.

He did not agree that the company's decision to donate 100 units of the diesel Accent to the Chennai City Police brought down the Accent's brand value.

On the contrary, he said the brand value has gone up. "May be it just increased the brand value because a police car required the best performance."

Chennai-Hometown

Why donate the cars when it had an export backlog? Chennai is Hyundai Motor India's hometown and it has been here for a decade. The company believes in contributing to the community of which it is a part and this is an activity of Hyundai Motor India Foundation set up last April, Mr Lheem said.

R&D centre

The Managing Director said the research and development centre in Hyderabad has started working on a small scale with about 110 engineers. It would support the R&D efforts of Hyundai Motor Company of Korea and would be involved in computer aided design and analysis of future models.

By 2010, the centre would have about 800 engineers, 500 of them assisting Hyundai Motor Company and the others for its sister companies and affiliates.

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