The Hindu Business Line : Kirloskar Oil plans capacity expansion

Pune, July 20 Capacity expansion, entering into alliances for different products, and shifting base of small engines seems to be the roadmap that has been chalked out by the Kirloskar Oil Engines Ltd.

Addressing presspersons after the company’s annual general meeting, Mr Atul C. Kirloskar, Chairman and Managing Director, KOEL, said the company has signed a pact with US-based Waukesha Engine for exclusive license to manufacture, sell and service globally 1,500-rpm diesel engines in the range of 3,250 to 4,900 hp for generating sets from 2.4 MW to 3.6 MW.

He said that this would also provide it with natural gas-based engines in the same range. The engines would be packed by KOEL and packaged generating sets and other aggregates would be sold and serviced by the company.

He said it would also give the opportunity to manufacture and supply components and assemblies to Waukesha for the manufacture of gas engines in the US. The feasibility study for manufacturing was yet to be done and is estimated to complete it within six months. “We expect to begin manufacturing within 24 months,” he said.

Fursungi plant

Mr Kirloskar said the company was also shifting its Fursungi plant to Rajkot — the move is expected to be completed by January 15, 2008 — and noted that the Rajkot operations would begin by the end of the current fiscal. He said the Fursungi capacity is currently 65,000 engines per annum but would be increased to 80,000 at the Rajkot plant.

He said that the change was happening as the lease agreement of 10 years was coming to a close as also a majority of the vendor base was out of Rajkot.

Commenting on other plans of the company, Mr Kirloskar said it is increasing its investment in plant and machinery to touch Rs 450 crore as compared to Rs 123 crore for FY07.

He noted that order fulfilment and new product development processes were also being redesigned to improve customer delivery in full and in shorter lead times. Sourcing function was being strengthened to meet the increasing demand, and quality supplies and leadership development programmes have been started in the company.

Export unit

He said the company is also setting up an export-oriented unit at Kagal to manufacture 12,000 generating sets per year and 100 per cent capacity utilisation is expected within the next three years. A vendor park was also being set up over 60 acres land.

The total land spread in Kagal is 163 acres. He said the investment in this would be Rs 550 crore funded by long-term debt of Rs 350 crore, and the rest by accumulated internal accruals.

At full capacity, it is expected to employ about 1,000 people. Mr Kirloskar said the company was also looking at products with green technology.

A green technology cell has been set up and he added that it has already launched engines to run on bio-diesels. The emissions from these engines are 20 to 50 per cent lower as compared to engines running on high speed diesel, and does not emit sulphur.

Commenting on the first quarter results, he said the sales have increased by 15 per cent to touch Rs 492 crore over the corresponding period figure of Rs 427 crore. Having exited the castings business, the growth in sales is higher by 18 per cent over last year on like-to-like basis. The profit before tax is Rs 41crore (Rs 34 crore), an increase by 20 per cent.