Financial Daily from THE HINDU group of publications
Saturday, Oct 30, 2004
Sona Koyo plans to hike investment in EOU To set up dedicated power steering line for Hyundai
Dr Surinder Kapur.
Chennai , Oct. 29
SONA Koyo Steering Systems Ltd, which on Friday inaugurated its 100- per cent export oriented unit (EOU) at Sriperumbudur near Chennai, plans to double or triple investment in the plant over the next two years as export orders pick up.
The plant has been set up at an investment of Rs 19 crore and has a capacity of 2,50,000 units of manual steering systems a year.
Company officials said it had made a commitment to Hyundai Motor India to set up a dedicated power steering manufacturing line for its cars at an investment of Rs 12 crore. The line will have a capacity of 1,20,000 units a year and the company hopes to start work from January or February.
Currently, Sona Koyo Steering makes power steering systems for Hyundai at its plant in Gurgaon. It has a plant at Sriperumbudur to manufacture manual steering systems for Hyundai Motor India with a capacity of 1,00,000 units a year, which it now uses to finish the power steering units made at Gurgaon, according to Dr Surinder Kapur, Chairman and Managing Director, Sona Koyo Steering Systems.
He told at a press conference at the plant that the EOU had orders from Koyo USA to supply 10,000 steering systems a month and from Mando USA to supply 5,000 steering systems.
Once production stabilises, the supplies to Koyo and Mando will be doubled. The unit hopes to earn revenues of $4 million (the amount that had been invested in the plant) in the first full year of operations. The company is confident that sales could be increased to three times that amount in a couple of years.
Sona Koyo was also in talks with manufacturers of agricultural tractors and off-highway vehicles in the US and Europe to supply steering systems to them.
This year the company hopes its exports will increase to Rs 30 crore from about Rs 6 crore last year. In two years, the company expects exports to touch Rs 100 crore.
Dr Kapur said Sona Koyo expected sales of Rs 300 crore this year, 50 per cent of which would come from Maruti Udyog, 17 per cent each from Mahindra & Mahindra and Hyundai Motor India, 7 per cent from Toyota Kirloskar and 5 per cent from Tata Motors. The company hoped to increase sales to Tata Motors.
Sona Koyo, which recently announced that it was picking a 21 per cent stake in Fuji Autotech in France, is in talks with Fuji Autotech to obtain a technology transfer licence to supply its products in India. It hopes to finalise the agreement by January, Dr Kapur said.
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