Carborundam Universal enters China

Chennai: Yet another city-based company has marched into China - Carborundam Universal Limited (CUMI), part of the $1.5-billion Murugappa group.

CUMI has opened a sales office in Beijing, and has plans to put up a bonded abrasive plant in China. However, the company is not in a hurry as its China plans will be implemented in phases.

While discussions are on with potential partners, CUMI's production operations in China, according to K Srinivasan, president and whole-time director, will be in two phases. "The first phase, to be in 2006- will be relatively small in scale. Once the operations are up to our expectations, we will scale it up in the phase two."

Different operational possibilities are being considered in China - starting a greenfield joint venture or leasing an existing plant. "In any case, Cumi will have the majority holding in the Chinese outfit," he adds.

The rationale behind the entry into China is to have a plant there to cater to the global market rather than import just the raw materials to cut the production costs here. "A plant in China gives us around 25 per cent cost advantage over Indian costs." However the China plant will not phase out any of the production lines here.

For Cumi, China is one part of the strategy to increase its footprint as it is considering a plant in Dubai. In addition the company is constantly on the look out for acquisitions overseas.