State extends tax incentives to Dynamatic Technologies

Company is setting up greenfield facility at aerospace SEZ.

Bangalore-based Dynamatic Technologies Limited, a manufacturer of engineered products for automotive, aerospace, hydraulic and security applications, has secured several tax concessions and incentives from the government of Karnataka. The incentives are applicable to the company’s upcoming manufacturing facility at the Aerospace Special Economic Zone near the Bangalore international airport.

Dynamatic is investing Rs 465 crore to set up a greenfield facility to manufacture large aerostructure assemblies, composites and complex engineering products. It has acquired 35 acres from the Karnataka Industrial Area Development Board.

The government has granted exemption on payment of entry tax on purchase of immovable assets, machinery and power generating equipment. The company would also be allowed to convert 25 per cent of value added tax as interest free soft loan for a period of seven years with a ceiling of 50 per cent its fixed capital expenditure.

The repayment of such soft loan can be made in three annual installments after the completion of the seven-year period.

Even though the New Industrial Policy 2009-14 of the state government does not provide any special incentives for units coming within the Bangalore rural and urban districts, Dynamatic has been given special tax concessions only because its new facility is coming up at the Aerospace SEZ, a government order said.

The state cabinet had passed a resolution in this regard during its meeting held on April 19, 2011. However, the government has put a condition that the companyshould complete its investment programme in three years and provide employment to around 2,100 persons directly.

“Considering the fact that Bangalore city will get a special prominence with the setting up of aerospace units, there is a need to give such units including Dynamatic Technologies special incentives,” the government said in its order. Udayant Malhoutra, managing director, Dynamatic Technologies said the company would be developing the new facility in phases over the next six years.

The first phase will see setting up of modern sheet metal shop, centre of excellence for complex machining and surface treatment facility for large assemblies. It is slated to commence production next year.

“The new manufacturing facility will help us emerge as a strategic supplier to global Tier-I companies and aerospace primes,” Malhoutra told Business Standard.

Dynamatic reported consolidated revenues of about Rs 400 crore during the second quarter-ended September 2011.

Dynamatic Aerospace is working with international aerospace majors on exports initiatives. It is working with EADS and Spirit AeroSystems to assemble Flap-Track Beams for the Airbus Single Aisle A-320 family of aircraft.