To take advantage of the excise and tax incentives there
Cluster of units
Tube Investmentswas planning to set up two divisions tubes and chains
Carborundum Universalexpects to start commercial production in April 2007
Chennai, Nov. 2
The Murugappa Group plans to have a cluster of manufacturing units in Uttaranchal over the next two years. Tube Investments plans to set up more divisions there close on the heels of another of the Group's company, Carborundum Universal (CUMI), which is expected to start production there from next year.
Mr A. Vellayan, Vice-Chairman, Murugappa Group, told
Business Linethat Tube Investments was planning to set up two divisions tubes and chains in Uttaranchal to take advantage of the excise and income-tax incentives. It is now buying land to set up the facilities.
Mr Vellayan said that incentives apart, leading automotive manufacturers were going to Uttaranchal Hero Honda, Bajaj, Ashok Leyland... and it was natural for components suppliers to set up a base close to their customers. "Everybody will be there in time," he said.
Mr N. Srikanth, President, Tube Products India Ltd, said that Tube Products was looking at a cluster of units in chains, tubes and metal forming divisions in Uttaranchal. With major automobile companies setting up shop there, `it makes immense logic' for the Murugappa group, one of the leading suppliers, to set up operations in the new location.
The companies would initially supply to ancillaries of Hero Honda, Bajaj Auto, Mahindra & Mahindra and Tata Motors.
Tube manufacturing unit
Once a sizeable market is reached, the company would find it viable to set up a tube manufacturing unit there. It would be the same for chains and for metal forming units because of its association with Tata Motors. Eventually, the company also hopes to cater to Mahindra & Mahindra, he said.
Mr Srikanth said that the capital outlay for the projects was yet to be assessed but initial estimates put it at about Rs 75-80 crore for all the three plants. It was targeting start of trial production by December 2007 and commercial production by January 2008.
Mr K. Srinivasan, President, Carborundum Universal Ltd, said the company expects to start commercial production in April 2007 to take advantage of the full accounting year for the concessions on offer at Uttaranchal.
The company is investing Rs 20 crore in the first phase and plans to invest an equal amount in 2008. In the first full year of operations, the business generated would be about Rs 50 crore.
The specific advantage that the concessions in Uttaranchal gives to CUMI is that the concessions give them the lee way to target the cost-conscious low-end market what he described as the `price-only' segment.