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Sundaram-Clayton unveils Rs 750-crore expansion plan; announces US factory

The key reason for the American venture was to get geographically closer to the company’s customers so that supply can be agile and flexible to changing production demands of manufacturers.

, ET Bureau|
Updated: Feb 09, 2017, 09.03 PM IST
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The reason for choosing Dorchester County, South Carolina, was skilled labour, proximity to a port and conducive business climate.
The reason for choosing Dorchester County, South Carolina, was skilled labour, proximity to a port and conducive business climate.
CHENNAI: Sundaram-Clayton, automotive component manufacturer which is also the holding company of the $1.6 billion TVS Motor, is investing Rs 400 crore to expand its facilities in India and Rs 350 crore to build a 50-acre greenfield plant in the US. The expansion, including the US venture, will raise the company’s production capacity to 80,000 tonnes. In terms of investments, the company had invested Rs 408 crore in the last five years.

The key reason for the American venture was to get geographically closer to the company’s customers so that supply can be agile and flexible to changing production demands of manufacturers. Construction at the plant is set to begin by April this year and production is set to begin by 2018. Being a green-field plant, the timeline for revenue accrual would be a little longer than Indian expansions, though the US plant is expected to yield income by 2018 calendar year.

Lakshmi Venu, Joint Managing Director of the company, said recent developments of protectionism under the new American regime were a phenomenon that requires a deeper study to comment and that the move to set up a plant in the US, was thought up two years back.

While the costs of production are not expected to be vastly different from making in India, Venu said: “More than costs, the driving imperative for the move was to shorten logistics, and get near-shore for making our supply nimble.”

The reason for choosing Dorchester County, South Carolina, was skilled labour, proximity to a port and conducive business climate. The US, where many of Sundaram-Clayton’s customers are located, commands a sizable portion of the company’s exports. Rest of the exports is dominated by shipments to Germany and Sweden.

On Indian business, Venu said: “Over the last decade, the automotive components industry in India has grown three times in size and exports have grown rapidly as well. I believe that there is a bright future for Indian auto component companies both in India and in the export market. I am also confident that India will be among the fastest growing markets globally in the next few years and we will continue to invest strongly and grow in India.”
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