Schwing Stetter to invest Rs 1.75 bn in India 3/17/2009

Approaches the Tamil Nadu government for allotment of 100 acre land.

Schwing Stetter (India), a wholly-owned subsidiary of Germany-based ready mix concrete (RMC) equipment manufacturer Schwing Gmbh, has received an in-principle approval from its board to invest about Rs 175 crore in consolidating its existing manufacturing operations or setting up an additional facility in India. The company has approached the Tamil Nadu government seeking allotment of 100 acre for its proposed expansion.

Schwing Stetter currently has a facility to manufacture batching plants, tower plants, RMC and concrete mixing plants at Irungattukottai near Chennai, and two plants for manufacturing truck-mounted mixers, pumps and concrete placing booms. Together, the three plants have a capacity to manufacture units worth Rs 1,300 crore.

“At present, we are running a space utilisation programme in these units with the help of a consultant. This would increase the productivity by 75 per cent. However, this will not be enough. We have set a target to double the capacity in the coming years,” Anand Sundaresan, managing director of Schwing Stetter (India), told Business Standard.

Sundaresan said the company had approached the State Industries Promotion Corporation of Tamil Nadu for allocation of around 100 acre at Pillaipakkam. “If the state agency allots the land at Rs 20 lakh per acre, then we would acquire 100 acre and consolidate all the three manufacturing facilities to set up one mega plant. If the costs go up, then will look at acquiring 40 acre to set up an additional facility,” he said.

According to VG Sakthi Kumar, chief operating officer, Schwing Stetter is also looking at alternative locations including Gujarat. “We are looking at port cities to cut logistic costs and Gujarat fits in our radar.”

Schwing Stetter (India), which currently caters to the domestic and international markets including West Asia, Far East, Germany and other European countries, plans to make India a sourcing hub, Kumar said.

The group’s turnover stood at Rs 7,000 crore in 2008, of which the India operations accounted for Rs 850 crore. Schwing Stetter in India has reported compounded annual growth rate of 62 per cent. The company said it could take a hit on its revenues to the tune of Rs 200 crore in 2009 due to the current slowdown and ensuing elections.

“Between October and December last year, we witnessed a drop of about 25 per cent in our orderbook as some sectors like real estate, to which the company caters to, took a beating,” Sundaresan said.

Adding to this, the upcoming elections in May and June will cause delay in execution of some government projects. All these resulted in revising the company's turnover target of Rs 1,000-1,100 crore for the year 2009 to Rs 900 crore.

“RMC supplies have come down by around 70 per cent during the last three months of 2008. The segment contributes around 30 per cent to our overall business,” Kumar said. Sundaresan, however, said that growth in the infrastructure sector, including airports, seaports and roads, has helped the company to make up.

http://www.business-standard.com/india/news/schwing-stetter-to-invest-rs-175-cr/351950/