Goetze may set up third piston unit

The Anil Nanda-promoted Goetze India is considering the possibility of setting up a third plant in the country.

The additional demand for the piston assembly unit could come from a large order coming from its equity-cum-technology partner, US-based Federal Mogul.

"Component manufacturers in the developed markets are looking at low-cost countries like India to increase capacity for servicing the replacement market," said Arun Anand, executive director, Goetze India Ltd.

Goetze exports piston assembly to the tune of Rs 30 crore at present and expects to double this next financial year. "These are mostly exported to the replacement market in neighbouring countries like Sri Lanka and the Middle East," Anand said.

In the next couple of years the company expects to firm up a buy-back deal with its technology partner to service large batch orders for the replacement market in Europe and the US. Anand, however, said plans to set up additional capacity in a third plant is still in the 'drawing board' stage.

Goetze has two plants "" at Patiala and Bangalore "" with a total capacity 53 million piston rings and 11 million pistons. The company is at present running at 80 per cent capacity and is moving into a third shift from January next year.

"At present only the critical machines are running on the third shift. With an investment of Rs 40 crore this year and another Rs 40 crore next year, we will be balancing the load to achieve full capacity utilisation next year," he said. The entire investment will be funded from internal accruals.

For the current financial year the company expects to earn a top line of Rs 500 crore against a turnover of Rs 496 crore for the previous financial year.

The company has also targetted a growth of 20 per cent in 2005-06. The investment undertaken during this financial year and the next, will also be to meet the fresh demand created by the Bharat III emission norms to take effect from April 1, 2005.

While the new norms will come to effect next year in the four metropolitan cities, the demand will surge further as more cities and towns come under the new emission standards from 2006.