India: Liugong Plant Details Phase I
Plot Area (m2)
Plant Area
(m2)
Investment
(Rs Mn)
Equipment
Planned
177 000
20 000
Production
Capacity
(Units)
2000
1400
Wheeled
loaders,
excavators
India: Elgi, Net Sales, 2005-2009
(Rs Million)
2006 2007
3120 3786
2005
2852
2008
4514
2009
5510
DIESEL PROGRESS INTERNATIONAL EDITION
in April 2008, and the construction of the
plant commenced three months later. The
elapsed time from the start to the
finish of the project of only 12 months was
hailed as being exceptionally fast.
Built over a 17. 7 hectare plot with an
initial investment of US$30 million, the
20 000 m2 plant constitutes the first
phase of the total planned construction. It is fully equipped with the latest
machine tools and assembly lines to
produce 2000 units per year. Besides
the fabrication unit, paint shop and
assembly lines, the plant also includes
an office building, a fully operational
research and development center,
product support facilities and warehouse facilities.
To begin with, the company will start
the production of wheeled loaders at
this plant, and subsequently the production of other machines such as
hydraulic excavators, asphalt finishers,
backhoe loaders, motor graders and
compaction equipment will be phased
in. An investment of up to US$25 million has been planned for the second
phase of construction, and the total
investment after the completion of the
third phase is envisaged to be around
US$100 million.
This is the first manufacturing facility
that Liugong has established outside
China. Currently, it employs 120 people, but once fully operational, it is likely to have 750 direct employees. The
plant is also expected to provide indirect employment to around 3000 people in support capacities.
LIPL has moved swiftly to develop its
marketing and product support structure across the country. It has opened a
branch office and logistics center in
Chennai and has already appointed 12
dealers at strategic locations, while
more dealers are being appointed
across the country, up to a maximum of
20, which the company regards as
being the ideal number.
LIPL believes that the growing domestic market and absence of major
local brands will provide it with sufficient
growth opportunities, but only if the
prices of all products are kept under
control. The company will start production with 30% local content, but it has
already set a target of achieving 70%
localization. To meet this objective, LIPL
is supporting the evolution of a large
number of new ancillary and small-scale
industries in and around Indore.
Though the company has set itself
ambitious sales targets of US$175 million by 2012 and US$300 million by the
year 2015, its eyes are firmly set on the
neighboring markets. Once fully operational, this unit may be used as a local
hub for exports to South Asia, Middle
East and African markets.
Another example of the dynamism of
India is evidenced by the continued
expansion of Indian manufacturers into
other regions. One of the latest is Elgi
Equipments Ltd., the leading domestic
manufacturer of industrial compressors, which has established its first
wholly owned subsidiary in Brazil. The
new company, based in São Paulo,
has been named Elgi Compressores
Do Brasil, and it plans to develop its
marketing and product support network in Brazil and establish a warehouse facility in São Paulo to make its
products more readily available. This
will be followed by the local assembly
and production of some of its products
in order to help it penetrate the Latin
American market.
Exports to Brazil commenced in
2006, and in the last two and a half
years Elgi has managed to create a
niche market for its products there.
Brazil constitutes nearly 4% of its global
compressor business, and the company
intends to capture around 10% of this
market in the next four years through
this recently opened subsidiary.
Elgi has been an established manufacturer of compressors in India for
the last five decades. It started operations in 1960 as a manufacturer of
reciprocating compressors and service station equipment and soon diversified into the production of rotary and
centrifugal compressors, diesel engines and automotive equipment.
Currently, it has two manufacturing
units at Coimbatore, in the southern
state of Tamil Nadu, with 8. 9 hectares
of land and 3. 3 hectares of covered
factory area.
Today, Elgi is India’s largest manufacturer and exporter of mobile compressors. The company’s net sales
increased 93%, from Rs 2852 million in
2005 to Rs 5510 million in 2009. Over
85% of its sales revenues are contributed by its compressor business,
and in 2009, nearly 17% of the company’s
compressor business came from its
overseas markets.
The company has been exporting
its products to all major markets for
many years, and they are now well
accepted in Europe, North America,
Africa, Asia and Australia. As a major
strategic decision to enhance its export
business, Elgi is opening subsidiary
companies in its key markets. It already has two overseas subsidiaries:
Elgi Gulf FZE in Sharjah, UAE, and
Elgi Equipments Zhejiang Ltd. in
Jiaxing, China. ;
