Korean Parent To Source Engines From Daewoo

Daewoo Motors India Ltd has kicked off exports of fully assembled double overhead cam shaft (DOHC) engines and gear boxes from its plant in Surajpur, Uttar Pradesh.

This is a big step towards helping the company achieve its export target of Rs 1,000 crore this year.

The exported engines and gear boxes are to be mounted on Cielos manufactured in Daewoo's Pupyong plant in Korea.

The state-of-the-art DOHC engines are being manufactured and exported from India for the first time ever.

"We have bagged order for the supply of 15,000 engines per month. We are confident of exporting about 1.8 lakh engines and 1.8 lakh gear boxes this year," Daewoo Motors India's managing director S G Awasthi said.

"All this will mean export revenues of Rs 1,000 crore this year. We hope to double this to Rs 2000 crore next year," he added.

The company has also been exporting cylinder heads since late last year.

Though Daewoo Motors India has started manufacturing and exporting DOHC engines, it does not have any immediate plans to fit this engine on the Cielo in India. The Cielo currently runs with a single overhead camshaft engine.

"We will be upgrading the Cielo in the year 2000-2001. We will then relaunch the model with a DOHC engine, "Awasthi said.

However, Daewoo, Korea, has already finalised plans to convert Cielos manufactured there to DOHC technology.

However, Daewoo's Pupyong plant can make only SOHC engines. "Rather than investing more in setting up new facilities in Korea, Daewoo has decided to use India as a base for DOHC engines," company officials said.

"We have also received concrete enquiries for body panels from Daewoo's plants in Uzbekistan and Iran. We are currently working out the most economical transport route for the exports," Awasthi added. The panels will be made in the new press shop at the Surajpur plant.

The exports, like the company's passenger car business, will also be a low margin operation. "But it will certainly add to our bottomline," Awasthi said.

Daewoo Motors India hopes to sell about 15,000 Cielos this year. It also plans to launch the 80 CC small car, the Matiz in September and hopes to sell 20,000 to 22,000 small cars this financial year.

"If we achieve these targets and if there are no major increases in costs, we expect to report a turnaround this year," Awasthi said.

Daewoo has also acquired an additional 200 acres of land adjacent to its current site. The second phase of the project envisaging a further 1.5 lakh per annum capacity had ben deferred earlier.

"The board will take a decision on when to start the expansion when it meets at the end of the current financial year, " Awasthi said.

Daewoo also proposes to raise Rs 250-Rs 300 crore needed for the small car project through the domestic debt route.

Daewoo Motors India is planning a satellite hook up of its research and development (R&D) centre with that of its parent in Korea. With this, the R&D centre in Surajpur, Uttar Pradesh, will be completely integrated with Daewoo's global R&D network.

Daewoo Motors India has set up a state of the art R&D centre at an investment of Rs 50 crore.

The centre is currently testing a new variant of the Cielo, code named `Executive'. The variant may be introduced as a cheaper alternative to the GLX version of the Cielo, company sources said.