Setco Automotive plans assembly plant overseas

Company looking at increasing exports besides investing in domestic expansion

Setco Automotive, makers of clutch systems for medium and heavy commercial vehicles (M&HCVs), is planning to set up an assembly plant in Africa or one of the countries in West Asia. The location is yet to be decided, but the company can rope in a partner in one of these countries for the project.

Eying a Rs 1000 crore turnover in the next five year's time the company, which caters to 85 per cent of the original equipment maker (OEM) demand in the country, has drawn up plans to take the share of exports from a current 10 per cent to 20 per cent of its turnover in the coming few years.

Besides, Setco is also planning to double its domestic capacity, and invest in backward integration projects.

The company posted a turnover of Rs 365 crore in 2011-12, and aims to end the current fiscal with single digit growth.

"We are looking at setting up an assembly unit either in one of the African countries or in the Middle East. The location is yet to be decided. We can also have a partner in one of these countries to set up the unit, but nothing is finalised now including the investment details, " said Harish Seth, chairman and managing director of Setco Automotive.

Setco at present has two plants in India, one at Kalol in Gujarat and the other at Uttarakhand, besides a small facility in the UK which also houses a research and development (R&D) wing and another facility in the US.

As for the domestic expansion, the company is aiming to invest around Rs 75 crore in the next one year at its Uttaranchal and Kalol facilities to expand capacity as well as set up an R&D center. Around Rs 200 crore will be invested in setting up a foundry with capacity of 4,000 tonnes per month near Kalol as a part of the firm's backward integration plan.

Setco is planning to fund the expansion through internal accruals and debt, informed Seth.

The overall market for clutch systems comprising both OEM and aftermarket demand is around Rs 1000 crore in India, he claimed adding that that of this, the aftermarket constitutes the bulk of the demand.