Hyundai Kicks Off Production Of Santro...

Hyundai Motor India yesterday kicked off pilot production of its 999cc Santro at its Irungattukkottai plant in Sriperumbudur, near Chennai.

The plant has been commissioned in a record time of 17 months, according to managing director Yang Soo Kim.

"We have already invested over Rs 2,000 crore in the plant, which is Hyundai Motor Company's largest investment outside Korea,'' Kim said at a press conference at the plant site yesterday.

The plant will have an initial annual capacity of 120,000 cars in the first phase.

Full capacity utilisation is likely to be achieved in 2000.

The company expects to break even in 1999, its first full year of operation, when it has projected a sales of 60,000 cars.

 

The plant, which will work on a single shift basis for the first few months, will graduate to double shift operations in February 1999.

"Santro model is likely to be priced in the Rs 2.7 lakh to Rs 3.1 lakh band,'' B V R Subbu, director marketing said.

About 10,000 cars are expected to be produced in the current calendar year.

About 60 local vendors, most of them single sources, will supply components for the project.

Sixteen Korean joint ventures in the ancillary sector are also investing Rs 640 crore in various facilities around the site.

An indigenisation level of 70 per cent has been achieved during the first year itself against the government's minimum stipulation of 50 per cent over three years.

The Hyundai plant is complete in all other aspects with a press and body shop, paint shop, engine and transmission shop, plastic injection and final assembly shop.

Hyundai is also looking at the export market, but company officials said it was premature to comment on the details.

"We have imported capital goods under the EPCG scheme and have an obligation to import eight times the value of imports over a period of 10 years,'' Subbu said.

The plant also has an extra capacity of 10,000 engines meant for exports.

The plant's annual capacity will be raised to 200,000 cars in the second phase.

However, investment activities for the second phase will begin only when the domestic car market hits the one million cars mark.

"If we need the money we will come out with an initial public offering (IPO),'' officials said.

"Our investments will depend on the growth of the market,'' they added.

For the first phase investment of Rs 2,300 crore, Hyundai Motor India has tied up with Indian Bank, UCO Bank and the State Bank of India for rupee term loans, besides equity from the Korean parent and external commercial borrowings.