Fate of Atul Auto's Sri Lanka project hangs in balance

Rajkot-based three-wheeler maker Atul Auto Ltd, is soon going to take a call on the fate of its assembly unit project planned in Sri Lanka as approvals are yet to come in. Meanwhile, the company is all set to begin work on its Bavla facility near Sanand that would double its existing production capacity.

Atul Auto had firmed up plans to set up a completely knocked down (CKD) assembly unit in Sri Lanka in 2012 with a capacity of around 10,000 units per annum (pa). The company had also submitted its proposal to the Board of Investments (BoI) in Sri Lanka, however, approvals are yet to come through.

Niraj Chandra, director, Atul Auto confirmed the same. "We have not got the necessary clearances from the BoI. We cannot wait indefinitely. We will take a call on the future of the proposed project in our internal board meeting," he said. The company is planning to discuss the issue in an internal meeting soon, and would decide whether to go ahead or drop the project.

Atul had planned an investment of about Rs 100 crore in setting up a CKD assembly unit in Sri Lanka after the local government had raised the import duty on three wheelers to that country in an attempt to boost local manufacturing. The Gujarat-based three-wheeler maker which is already present in neighbouring markets like Bangladesh, sought to set up an assembly unit in Sri Lanka with a local partner to boost its volumes. Atul Auto had earlier tied up with Bangladesh Machine Tools Factory for assembling a six-seater passenger vehicle Atul Gem in May 2011.

Meanwhile, buoyed by the domestic demand, the company is all set to start work on its local manufacturing unit at Bavla near motown Sanand in Gujarat. Chandra informed, "We have almost completed procuring land for the project, and the documentation work is on. We expect to start work as soon as the necessary approvals are in place."

The company is buying around 70 acres of land at Bavla to set up a 60,000 units pa factory with an estimated investment of about Rs 100 crore. The Bavla unit would be focussed on exports.