Birla Perucchini lines up Rs 25 crore expansion

Birla Perucchini, a Yash Birla group auto ancillary company, is planning to shift its Aurangabad plant to Jammu in 2008-09. The company plans to consolidate its auto component making operations at one place. It has lined up a Rs 25 crore expansion plan for Jammu.

The company has plans to set up a facility in Jammu to manufacture machined and unmachined castings of 800 tonne per month for the auto and auto component companies.

According to a source close to the company, Birla Perucchini has plans to go public after consolidation of its manufacturing facilities.

The Jammu unit of the company will be producing 950 tonne of unmachined sand castings in 2007-08, which will be increased to 7,600 tonne per annum by 2010-11.

The production of machined sand castings is likely to go up from 200 tonne in 2007-08 to 3,200 tonne by 2010-11. The sales value of both machined and unmachined sand castings at Jammu unit will go up from Rs 11.50 crore in 2007-08 to Rs 108 crore in 2010-11. The company expects a pre-tax loss of Rs 1.03 crore in 2007-08 and subsequently pre-tax profits of Rs 20.71 crore by 2010-11.

The consolidation of the Aurangabad and Jammu plants would see the company's turnover from auto component sales increase from Rs 17.82 crore in 2005-06 to Rs 155.60 crore in 2010-11. The profit before tax is expected to increase from Rs 5.52 crore to Rs 46.21 crore in the same period. By shifting the Aurangabad plant to Jammu in 2008-09, the company will draw immense benefits.

The company will get excise benefits, its cost of raw material and storage expenses will come down and will save 40-50 per cent on employee cost and overheads.

The company spokesperson told Business Standard that the Jammu manufacturing unit will lead to income tax benefits for 10 years. It will get 100 per cent income tax exemption for the first five years and 30 per cent for the next five years. The company will get capital investment subsidy of Rs 75 lakh.

The other benefits include, 100 per cent power subsidy on a new diesel generation (DG) set with a maximum of Rs 25 lakh for one mw. The company will exempted from paying central sales tax up to March 2015.