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Mahindra partners Ideal Motors to locally assemble vehicles in Sri Lanka

By local assembly cum manufacturing operation, Mahindra Ideal will save over 70% in taxes.

, ET Bureau|
Updated: Aug 17, 2019, 11.16 PM IST
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Despite years of attempt to push exports market, the share of overseas sales in Mahindra's total business has remained below 10%.
WELIPENNA, COLOMBA: In a bid to accelerate its global footprint, Mahindra & Mahindra, the country's leading utility vehicle maker on Saturday inaugurated its first completely knocked down facility in Sri Lanka with its local joint venture partner Ideal Motors under the subsidiary Mahindra Ideal Lanka.

The local automotive car assembly plant at Welipenna, near Colombo, Sri Lanka will assemble range of utility vehicles and commercial vehicles for the company in order to arrest high import duties in Sri Lanka for completely built imports which ranges 100% to 300% based on engine size or cubic capacity.

By local assembly cum manufacturing operation, Mahindra Ideal will save over 70% in taxes and will be able to price KUV100 at 3.2 million Sri Lankan rupees closer to Maruti Suzuki Alto. Post local assembly of KUV, Mahindra will be localising its pick up trucks in Sri Lanka.

Mahindra Ideal Lanka – a 35:65 JV majority owned by Ideal Motors will be investing 200 crore Sri Lankan rupees or 80-90 crore Indian rupees in the facility, as the government of Sri Lanka pushes for industrialization and seek to make the country an exports hub and capitalize on the Free Trade Agreement with India.

Mahindra Ideal Lanka claims that it is the first major car assembly cum manufacturing plant which will strive for domestic sourcing in the times to come to push local manufacturing and economic growth.

The CKD assembly plant was inaugurated in the presence of Honorable Prime Minster of the Democratic Socialist Republic of Sri Lanka, Ranil Wickremesinghe, his Cabinet of Ministers, Malik Samarawickrama, Indian High Commissioner to Sri Lanka, Pawan Goenka, Managing Director, M&M Ltd, Arvind Mathew, Chief of International Operations, M&M Ltd and other dignitaries.

Pawan Goenka, MD, Mahindra & Mahindra Ltd said the inauguration of this automotive assembly plant is a significant milestone for Mahindra’s foray into the Sri Lanka market.

"Sri Lanka is a key strategic market for us and we are now fully equipped to deliver products customised to local needs, on time. I would like to thank the Government of Sri Lanka for their unstinted support and am very optimistic that this new assembly plant will not only add to industrial growth in the country but will also generate significant employment opportunities at our plant and at supplier’s end," Goenka added.

Mahindra Ideal Lanka will assemble KUV100, a compact SUV, with a production capacity of 5000 units per annum. Spread over 10 acres, Mahindra Ideal Lanka will localize 4 components, namely battery (Exide), tyres (Ceat), seats and exhaust. The plant is expected to provide employment in the tune of 200 people directly and indirectly over the next 2 years.

To be sure, Mahindra is already a leader in the Sri Lankan commercial vehicle market and the company is eyeing a larger share of tractors in this market.

Goenka said this is just the starting point and the company would like to see a bigger market potential in the times to come.

Annually 36000 units are sold in Sri Lanka, of which only 20% of 7000 units are new cars and balance sales comes from Used car market, which is locally called as reconditioned car market.

Nalin Welgama, the chairman of Ideal Motors, said Ideal and Mahindra have been partnering each other for a decade to deliver value to the customers of Sri Lanka. This inauguration signals the epitome of his company's dream and ambition, which was to assemble a passenger vehicle locally, by partnering with an auto major like Mahindra known for their tough and rugged DNA.

“This new partnership will enable Sri Lanka to ‘Rise’ and manifest its glory through the ‘Made in Sri Lanka’ route. Import substitution is what we need for this market. Our focus is on locally sourcing more components and build local industry,” added Welgama.

Aravinda de Silva, Deputy Chairman Ideal Motors added with this local assembly unit, Mahindra Ideal Lanka will now be able to deliver products in reduced time and at more affordable prices.

“This plant, a project of national importance will definitely encourage investment in manufacturing and development, to further the country’s economic upliftment,” added De Silva.

With over two decade long presence in Sri Lanka, Mahindra & Mahindra has so far sold 75000 units. The company has 400 touch points across the country.

Despite years of attempt to push exports market, the share of overseas sales in Mahindra's total business has remained below 10%. At the end of FY-19, Mahindra exported about 45000 units, accounting for 7% of its overall sales.

The new assembly plant will roll out the KUV100, petrol K6+ variant to start off with, followed by other variants in the near future. A global brand, expanding locally in Sri Lanka, Mahindra has an on-ground team to focus on the needs and aspiration of the consumers with a local office in Colombo.

(The journalist is in Colombo on an invitation from Mahindra & Mahindra)
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