The Hindu Business Line : Same India mulls shifting operations near Chennai

Chennai, April 22 Same Deutz Fahr India Pvt Ltd, the 100 per cent subsidiary of €1.1-billon Same Deutz-Fahr Italia S.p.A, which is increasingly focussing on export, is planning to expand capacity.

Speaking to Business Line the Vice-President (Overseas Business Unit) and Same Deutz-Fahr Italia S.p.A, and part of Same family, Mr Francesco Carozza, said Same India is mulling options to shift its plant to a location close to Chennai. “We are evaluating the options” and will take a decision in couple of months, he said.

As an initial step it has shifted its corporate office to Chennai on Tuesday. The marketing and purchase offices will be shifted to the city office soon.

Looking East

The Indian operations began as a 100 per cent subsidiary in 2002 (since 1999 it was 50:50 joint venture with Greaves Cotton Ltd), primarily to cater to the domestic market. In order to leverage local capabilities and stay competitive, Same Group has come out with a strategy to look more towards the East.

As part of the global strategy the Indian arm will support the group’s requirements for 50-70 hp range of tractors, besides catering to the domestic market. From now on it will also become a dedicated source for Euro II engines. The group will invest €20 million during the next five years, he added.

Elaborating on the strategy, Mr Carozza, said globally Same sold 35,000 tractors in 2007. The target is to sell 50,000 units by 2012 — of which 20,000 units will be coming from its operations in China, which will produce 11,000 units, India 7,000 and Russia 2,000, he said.

The strategy is to leverage core competitiveness and combine it with the local demand. While India will produce tractors in 50-70 hp capacities, China will make 80-100 hp. Russia will make special tractors with more than 230 hp engines, which will cost €80,000 each, he said.

In 2007, Same in India produced 3,800 engines — of which 800 units were exported. By 2012 the company will make 12,000 units of Same range of engines including 5,000 units for exports, eventually becoming a dedicated manufacturing unit for this category of engines. “We are now shutting down our engine assembly plant in Italy,” he said.

Component sourcing

Same S.p.A sources Euro III engines from Deutz in Germany, in which it holds a 43-per cent stake.

The group has also been sourcing components from fast developing economies, including India and China. Last year it sourced Euro €8-million worth of components from India and by 2012 it will reach €30 million.

It will also source components for a similar amount from China, he said.

The group sources about €800 million worth of components annually with about 5 per cent coming from outside of Europe.

This will increase to over 20 per cent in five years, he said.

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