Mico rejigs diesel parts business

Preparing for Euro II norms

MICO, part of the Euro 36.4 billion Bosch, is rejigging its diesel injection equipment business. While it has already announced a Rs 550 crore capex to launch Common Rail Diesel Injection Systems, it is also increasing the distribution pump system's capacity.

Simultaneously, it is reducing its inline pumps exposure, thanks to the unfolding emission norms.

Jochen Landes, general manager, sales original equipment said, "Next quarter our distribution pump capacity will more than double to around 4,00,000 units a year. In effect the distribution pump to inline pump capacity will be in the ratio of 2:1 by then, from a clear skew towards inline systems now."

This exercise is expected to call for an investment of Rs 120 crore at the distribution pump plant in Jaipur. In the short run though, the company said it is making efforts to ensure there are not many redundancies. It targets to keep running at least 55 per cent of the current inline pump capacity.

However, the realignment will still slow down the inline pump facility at Bangalore. Further, the inline pump nozzle manufacturing plant in Nashik is being retuned to turn out common rail injectors. Landes said, ultimately the Bangalore facility will service the common rail system's requirements.

With the Euro II emission requirements coming into force from next quarter, Mico said, the in-line pumps will not meet the specified standards in vehicular applications. Their use will be limited to off highway applications (stationery engines), construction equipment, gensets and heavy drain pumps besides tractors.

This will mean that auto makers will switch to distribution pumps leading to increased demand in the segment, Landes said.

Diesel fuel injection systems have been MICO's core business right from its inception in 1951. Today MICO holds a 81 per cent market share in the diesel fuel injection OEM (original equipment manufacturer) space.

Besides, it has also been identified as the centre of competence for single cylinder pumps, multi-cylinder inline and distributor pumps.

These moves are part of Bosch's growing interest in India. In August, it announced plans to invest Rs 1,000 crore in the country over the next four years.

While the CRDI system launch is one such move, the other is the setting up of a 1,400-seater software development centre in Bangalore, through its subsidiary Robert Bosch, at a cost of Rs 85 crore.

The development facility when staffed to its full will take the group's India development activity headcount to 3,000.