Varroc's catalyst plant goes on stream

Automotive components and sub-assemblies manufacturer Varroc Exhaust Systems inaugurated its catalyst manufacturing facility at Chakan last Thursday.

The plant, set up with the help of technological expertise provided by US-based Delfi Corporation, will manufacture 1.5 million catalysts a year.

Varroc Group MD Tarang Jain said the plant, set up at an investment of Rs 8 crore, will largely supply catalysts to Bajaj Auto's two- and three-wheeler divisions.

Jain said the capacity of the plant will be increased to 3.6 million units in the next three months, adding, a further $25 million will be invested in the facility in the next financial year. He added that the funds will be raised by internal accrual and long- term debt.

On the sales front Jain said, although Bajaj Auto will absorb over 65 per cent of the production, the company will also supply to other OEMs in the country. "Discussions are on with other two- and three-wheeler makers," he said.

The Varroc group is focused on automotives and sub-assemblies including warm and cold forgings, engine valves, starter motors and plastic injection moulded parts for cars, two- and three-wheelers. The group's turnover stands at Rs 900 crore, which Jain said, could be doubled in three years through capacity expansion and acquisitions in India and overseas.

Elaborating the plans for future expansion, Jain said the company is at an advanced stage of negotiations with a European multinational for acquiring technology in electrical motors for starters.

"We want to expand across the three lines of engine valves, starter motors and cold and warm forgings and emerge as a major global tier-1 supplier of automotives to OEMs," Jain explained.

The group is also close to a deal to acquire a European car component maker. "This is a major brand and the size of the deal would be around $30 million," Jain said.

John Fuerst, global head (catalytic converters operations), said the alliance will be expanded to include catalysts for the cars. He also hinted at the Varroc facility being used to supply catalysts to Delfi's facilities in Asia, Indonesia.

Delfi has been in India since 1995 through its local subsidiary and has has four manufacturing facilities in Noida, Gurgaon, Manesar and Mannur in Tamil Nadu.

The company makes gas-charged shock absorbers, modular strut assemblies, heat exchangers and compressors among other components. It also has a joint venture with the TVS Group.