MEI to set up auto ancillary plant near Chennai

Madras Engineering Industries (MEI) is planning to set up an auto ancillary plant in Mahindra World City, 40 kilometres away from Chennai, at an initial investment of Rs 20 crore.

MEI, which makes slack adjusters used in the braking system of commercial vehicles, expects its business to grow almost four-fold over the next four years.

The company's turnover was Rs 65 crore in 2004-05. By 2008-09, MEI's turnover is expected to reach Rs 250 crore, E K Parathasarathy, managing director, MEI, said.

He said MEI is the largest manufacturer of manual slack adjusters in the world. Globally, MEI is one among two manufacturers of automatic slack adjusters, a technologically superior product.

Exports make up a significant part of MEI sales. Last year, Rs 48 crore of the Rs 65 crore turnover came from exports. Its overseas customers include Arvin Meritor and Knorr Bremse.

John Bruce, UK, MEI's worldwide distributor of automatic slack adjusters holds 24 per cent of its equity.

About 18 months ago, MEI acquired a German manufacturer of manual slack adjusters, Parathasarathy said.

Though the company's plant did not give meaningful benefit, its brand name helped MEI sales, he added.

The demand for automatic slack adjusters in India is also expected to increase because standards that govern commercial vehicle manufacturing are to be raised in October 2006.

At present, MEI has two plants near Chennai -- one in Ambattur and the other at Marimalai Nagar. Parathasarathy said that MEI plans to invest a total of Rs 40 crore over the next two years, some of which could be in the existing plants.