DCM Engineering plans Rs 200 cr unit in Chennai

Punjab-based DCM Engineering Ltd is planning to set up a new unit near Chennai with a proposed investment of Rs 200 crore within the peiod of next two years.

The company has already purchased 50 acres for the project and hopes to commence operation on time.

DCM Engineering, which is a manufacturer of engine blocks and cylinder heads has a plant in Ropar district of Punjab. The company supplies its products to Hyundai, Maruti, General Motors (Daewoo Korea), Swaraj Mazda, Eicher Motors, Ashok Leyland, Mahindra & Mahindra and Sonalika.

Speaking to Business Standard, DCM Engineering Ltd, Chief mentor, Keashav Sachdev, said, "We plan to establish a new manufacturing facility with an annual capacity of 50,000 tonne of castings near Chennai (Tamil Nadu). The total project cost for setting up of a new facility will be about Rs 200 crores, which will be funded through internal accurals, debt and through private equity placement."

The company has proposed to set up this new project to cater to the growing customer base in southern states. Moreover, it would also be convenient for the company to export its products from southern ports, said Sachdev.

Commenting upon the selection of location, he said, "In the mid 70's we set up a unit in Punjab to cater to the demands of HMT tractors and later on provided engine block and other castings to Escort. Maruti and many other companies. But at present, more and more automobile companies are expanding their base in the southern region. So, in order to cater to their demands, we planned to set up a unit there. Secondly, even the input cost in southern part is lower than the northern region as the proposed location is very near to port. Thirdly, our raw material is steel and as the generation of scraps is higher where there is huge concentration of Industries, so it makes reason to set up base there."

The company is also targeting to achieve a turnover of Rs 350 crore in this fiscal, thus achieving a growth of 20 per cent over the corresponding period last year. Further, the company has also raised its annual capacity three times in the last five years.

"At present the annual capacity of our plant in Punjab is 72, 000 metric tonnes per annum," said Keshav. Also with the new plant in place in the next two years, the company is targeting to double its turnover.