Czech truck maker Tatra a.s. has decided to shift a part of its global Euro I and Euro II engine manufacturing operations to India and has firmed up an investment of Rs 125 crore to this effect.
India will also be the sourcing hub for such engines for the company's operations in neighbouring countries such as China and Russia.
The company, which is focussed on the off-road segment, is also planning to foray into the on-road segment this year by launching a trailer tractor. Soon it will also launch a new off-road vehicle having a larger tonnage capacity, which according to company executives, will be the company's flagship product during the coming year contributing 60-70 per cent of the annual volumes.
Trial run for the new product is currently on in Madhya Pradesh, Gujarat and West Bengal, RIS Kahlon, managing director of Tatra Udyog Ltd, told Business Standard. Tatra Udyog is a 50:50 joint venture between Tatra a.s. and the UK-based NRI group, Vetra Investments.
Kahlon said he expected 2002 to be a watershed year as far as Tatra Udyog is concerned. With engines expected to be manufactured in India beginning April 2002, the localisation content in the vehicles will increase to around 60-70 per cent from the existing level of around 40 per cent.
The project cost of Rs 125 crore for the engine manufacturing unit will be shared equally between the two partners. So far, the company has had made an equity investment of Rs 45 crore in the truck manufacturing facility which began operations in 1998.
Kahlon said the engines will be manufactured in a separate unit located adjacent to the company's existing truck manufacturing unit in Hosur near Bangalore.
While only around 800 engines will be manufactured next year, during the next three years, over 2,000 engines will be manufactured each year to meet not only the demand base in India, but also in neighbouring countries such as China, Russia, etc.
Tatra has a capacity to manufacture around 1,000 trucks per shift in its Hosur factory. However, the plant has been working at one-third the capitalisation. Tatra's Chinese factory rolls out more numbers. But it was set up long before Tatra made an independent foray into the company.
Tatra has been associated in India for a long time through an association with the Indian Army, which has several Tatra trucks in its stables. But these trucks are being procured by BEML, a public sector undertaking. BEML is sourcing the truck parts right from the Czech factory of Tatra.
"Tatra Udyog, the Indian subsidiary, has no plans to sell trucks to the defence sector directly. Demand from the defence sector is flexible. It is not steady at any time. So your manufacturing operations get affected if the demand drops," Kahlon said, adding, "today the volumes do not justify such an arrangement."
