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Corporate - Outsourcing


Schwing Stetter to source components from India

N. Ramakrishnan

Chennai, June 7

SCHWING Stetter (India) Pvt Ltd, which makes concrete mixing equipment, is likely to become a sourcing base of castings and forgings for its parent Schwing Stetter of Germany.

"We have got a list of items which we could source from here and send to them. That is under consideration," Mr Anand Sundaresan, Managing Director, Schwing Stetter (India), told Business Line.

Schwing Stetter (India) has a plant at Irungattukottai near here where it makes concrete mixers, batching plants and pumps. The company is going for an expansion in capacity.

He said the company was not able to look at sourcing components for its parent in the last three years as it had to concentrate on the domestic market. The castings and forgings that might be sourced from India would be used in truck mixers made by Schwing Stetter in any of its plants worldwide.

Mr Sundaresan said Schwing Stetter wanted the Indian subsidiary to begin sourcing components at the earliest. Schwing Stetter (India) hoped to start work on this as quickly as possible.

He said the Schwing Stetter group was trying to streamline its products in such a way that some products would be manufactured only in certain countries.

"We are trying to identify some products for India." For example, a trailer-mounted pump or the 17 m boom pump could be sourced for the world market only from the Indian plant. This could also be the case with the 30 cu.m. batching plant. Mr Sundaresan said the company also wanted strengthen its design capabilities. It had about 10 software engineers in the design division, which was registered with the Software Technology Parks of India.

Schwing Stetter (India) was looking for a design head for the division. At present, three engineers from the division were working on drawings for the parent company. The idea was to make the IT division within the company a separate profit centre.

To a question, he said Schwing Stetter had converted the loans given to the Indian subsidiary into equity after it got Reserve Bank of India approval. Following this, the Indian company's equity now stood at Rs 17 crore.

Mr Sundaresan said import duty on components was reduced to 20 per cent from 24 per cent and the special additional duty scrapped. The net effect of this was about 10.5 per cent. However, this was more than offset by the appreciation of the Euro against the rupee - it had gone up from Rs 48 to Rs 57, an 18.5 per cent increase. Schwing Stetter (India) hoped to increase local content in its products to cut costs. However, the imported content on some products would continue to be about 33 per cent, especially since the high wear resistant steel used by it was not available in India.

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