Daewoo To Launch 2 Models Next Year
Daewoo Motors is set to launch two new models beginning next year. While one will be a premium model superior to its existing product, Cielo; the other will be a small car in the range of 800 to 1000 cc. The latter will be a worldwide launch. Besides, it will also launch two commercial vehicles.
This was disclosed by S G Awasthi, CEO of Daewoo Motors, at the auto components and ancillaries investment meet at Lucknow.
Four major auto companies having their plants in Uttar Pradesh, viz Daewoo Motors, LML, Telco and New Holland Tractors, made presentations for ancillarisation, and invited entrepreneurs to come forward and establish units.
Awasthi said that Daewoo has already invested Rs.2800 crore in its projects. By the end of the year, it is expected to exceed Rs.3000 crore out of a total estimated investments of Rs.3600 crore.
He said there are around 10-12 units already supplying materials to Daewoo India.
In all, the company required 200 ancillaries since 50 per cent of the hi-tech components which it is manufacturing in-house now will be passed on to the ancillaries.
The company is expected to get additional 200 acres of land next month, and another 300 acres will be required for the SSI park which will house the world-class ancillaries.
They will have global economies of scale, and will have access to the best technology, he added.
Awasthi said that the first export consignment from India to Korea will be shipped next month, and India will be a major resource base for sourcing materials for the company.
Besides, the new models to be launched by the company will be truly world class. LML's Sanjeeva Shriya said that for the last five years, the industry has been experiencing growth of 33 per cent each year.
In fiscal 1995-96, the company sold 2.57 lakh two wheelers, he added. LML employs 8000 workers, and also provided indirect employment to 20,000 people. He said that LML is set to launch two new models. The first, christened as PK, will be launched in the third quarter of 1997, and the second, named Elite, will hit the roads in the beginning of 1998.
The company is also expand its capacity to 9 lakh units. By 2000, it will provide 4-stroke products in the form of scooters and motor cycles, he added.
He said the company receives its parts from 500 suppliers and vendors. Among these, 80 are located in Kanpur who supply materials worth Rs.100 crore. He said, "we shall require 40-50 acres of space for housing the computer aided design (CAD) and R&D departments."
The company is also hoping that 38 new units will manufacture parts for its new products. New Holland Tractors chief executive officerPalani Kumar said the company plans to invest Rs.175 crore which will be increased to Rs.210 crore very soon.
The company is also going to source 60 per cent of its parts from within the country. Kumar added that they plan to increase their production from 18,000 to 35,000 tractors in five years.
Telco's A. Vivek said that the company's plant at Lucknow, which started with 200-300 units per annum, is now manufacturing around 32,000 vehicles like MCVs, LCVs and Sumo. The capacity will ultimately by hiked to 1.20 lakh per annum, Vivek said, and added that the company is going to establish a large vendor base in the state.
Awasthi on the offensive
Telco became an auto giant today by close collaboration with Diamler-Benz for a very long time. So, what is the point of Tata talking about the multinational company (MNC) threat today?," asked S G Awasthi, CEO, Daewoo Motors.
Awasthi was reacting to a question posed by Business Standard on Ratan Tata's observations blaming the MNCs for the break up of joint ventures with Indian companies. Awasthi and Palani Kumar of Ford's New Holland Tractors both reacted adversely to Tata's observations, and laid the blame for such break up squarely on the doors of Indian Industrialists. A joint venture, Awasthi said, is expected to be between equal partners.
Palani Kumar said that globalisation of the Indian economy is a new phenomena, and there will be many agreements which may go sour. "Who asked the Indian industrialists to get into the auto sector when they could not afford the costs?
If a company is not able to sell its products and there is a need to pump in more money, who will be responsible for doing it? If the Indian partner is not ready, should the project be closed down? And if that is not done and the MNC wants to increases its stake, what is the harm in it?," he asked.
When pointed out that Tata's observations are borne out by the actual experience, as in the case DCM Daewoo, Siel - Honda, and, now, Tata-Mercedes, Palani Kumar said that quite often, it is due to the late realisation of the Indian partner they will not be able to put in as much money as required that seals the fate of such projects.
"In the last two years, no money could be raised from the market. So, their dreams have gone bust. Also, in some cases like the Tata-Mercedes project, the former seems to have had second thoughts about making its entry into the luxury car segment," he said.
He added that it is time for the MNCs to realise that there is no point in rushing into joint ventures with the Indian corporates. Instead, they should come and start their ventures on their own strength, Kumar said.