Caparo project cleared

The Madhya Pradesh government has cleared Swaraj Paul-promoted Caparo group's plan to set up an auto ancillary unit in the state with an investment of Rs 26 crore. This is the first part of the Rs 80 crore investment plan of the group.

Caparo group firm Caparo Engineers India Pvt Ltd, which already has an auto component manufacturing unit, will set up the new unit. Caparo Engineers has made an investment of Rs 30 crore in the unit, which manufactures cold-rolled metal sheet. The maximum supply of the unit goes to Eicher Motors, Pithampur (Dhar district).

Lord Swaraj Paul had signed a memorandum of understanding with former Chief Minister Babulal Gaur on November 26 in London to set up the unit in Dhar. The unit will manufacture 80,000 units of long member for trucks and cargo body parts in a similar quantity every year.

These parts are used in light, medium and heavy commercial vehicles. "The products will be supplied to Eicher Motors Ltd (EML) since both the companies have entered into a memorandum of understanding for the purpose and EML has assured Caparo providing and adequate capacity utilization to the unit," a source told Business Standard, adding "the pricing formula would ensure defined returns on equity, besides covering all costs".

According to sources, Madhya Pradesh Audyogik Kendra Vikas Nigam, a subsidiary of the Madhya Pradesh State Industrial Development Corporation, has acquired a land area of five acres (out of total 15 acres required to the company) at concessional rates for Caparo in Dhar. The state-level apex empowerment committee on investment had cleared the proposal recently and has assured the firm support.

"To raise fund of Rs 27.295 crore, Caparo will go for Rs 12.495 crore equity and Rs 15 crore as long-term debt. The investment will go up further to Rs 80 crore in an investment break-up of Rs 24 crore in a chassis unit, Rs 15 crore in an iron foundry and forging unit, and another Rs 15 crore for the expansion of a long-member unit. These units are likely to generate 200-500 direct jobs," an insider in industry and government said.

The state government, according to sources, has also decided to provide an interest grant of Rs 25 lakh and other sops and concessions defined in the new Industrial Promotion Policy.

Lord Swaraj Paul had announced in London the Caparo Group would adopt a community health centre in the tribal district of Dhar, providing medical facilities to 150,000 people in the district at a cost of Rs 10 lakh annually.