The Hindu Business Line : Caparo to manufacture Hyundai buses in India

Joining hands: Mr Mr Dev Mukherji, CEO, Caparo Vehicle Products India Ltd, and Mr Choi Han Young, President, Hyundai Commercial Vehicles, South Korea, at the signing of a technical agreement between Caparo India and Hyundai Motor Company in Chennai on Monday. Mr Sunil Pahilajani, Managing Director and CEO, Caparo India, is on the left.

Our Bureau

Chennai, March 24 Caparo India, part of the London-based Caparo group, on Monday signed a technical agreement with Hyundai Motor Company, South Korea, to manufacture luxury buses for sale in the Indian market.

The agreement was signed here by Mr Deb Mukherji, CEO of Caparo India, and Mr Choi Han Young, President of Hyundai Commercial Vehicles & Products, South Korea.

Under the agreement, Hyundai will provide technology and major components (including engines) and Caparo India will manufacture and sell the vehicles. Caparo is looking at a few sites, but company officials indicated at a press conference here that the plant could come up either at Sriperumbudur or Oragadam in Tamil Nadu or at Nellore, Andhra Pradesh. Both locations are close to Chennai.

Hyundai will receive a technical transfer free of $4 million. Initially, the plant, which will take “a few hundred crores” to set up, will produce 1,500 vehicles, but production would be raised to 5,100 by 2013. Three variants of the Hyundai Aero buses will be produced here. These will be powered by Hyundai engines of capacities ranging between 320 hp and 380 hp.

The market

While India’s commercial vehicles market is close to 300,000 units, sales of high-end luxury buses were only 5,000 in 2007. However, this number is expected to double by 2010.

Caparo mainly produces automotive components in India and is in the process of increasing its presence here by investing “over Rs 1,000 crore”. Among its ongoing projects are those for producing composite materials, tubular components and high tensile fasteners — all for automotive applications.

Magna model

However, the group has been pursuing contract manufacturing opportunities, where it would produce a vehicle for a OE (original equipement).

In informal chats with Business Line, Caparo’s officials had spoken of the group’s intention to adopt the “Magna model”, Magna being a $23-billion US company which, apart from producing components and providing design services, also makes fully-built vehicles for third parties.

In fact, Caparo’s officials had pointed out that the group produces “everything that goes into a vehicle except the electrical systems.” Today’s agreement with Hyundai is a step closer to the ‘Magna model’.

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