New Delhi: Telco Construction Equipment Co, the 60:40 joint venture between Tata Motors and Japan's Hitachi Construction Machinery Co (HCMC), has decided to set up a manufacturing facility at Kharagpur in West Bengal with an investment of Rs250 crore ($53.5 million).

The manufacturing facility, spread over 60 hectares with additional facilities for a vendor park, will manufacture backhoe loaders, midi excavators, off-highway dump trucks, wheel loaders and large mining shovels. The plant will begin operations by March 2008 and will supply domestic and overseas demand.

Telcon already has two existing facilities at Jharkhand and Karnataka and the new facility will help the company meet demand from both domestic and international businesses.

A company statement read, "Telcon needs to create new capacity to meet growing demand from India's infrastructure sector. It has been selected as a source by HCMC for select equipment for international markets. The new plant will take the company towards being a full liner in the construction equipment business," the statement said.

The plant will also have a research and development centre, to enable the company develop products for both domestic and international markets. It will generate employment for about 500 people, including both direct and indirect jobs, the statement said.

Recently Telcon recently spent Rs300 crore for doubling its capacity to 9,000 pieces of equipment per year to meet the sourcing need of the Japanese partner Hitachi and to meet the demand of the growing domestic construction and infrastructure sector.
Rana Sinha, managing director, Telcon said the Japanese partner of the JV had begun sourcing components and aggregates (of construction equipment) from Telcon to meet its market requirement in Netherlands, Indonesia and Japan.

The orders, which stand at around Rs20 crore now, are likely to cross Rs100 crore in the next three years. These include fabricated components, machined parts and forgings.

Telcon and Hitachi are also setting up joint product development programmes, to enable new technology from Hitachi, adapt to domestic conditions. Telcon is the largest player in the domestic construction equipment market, commanding a market share of 40 per cent. Telcon's competitors include L&T-Komatsu, Catterpillar and JCB.

Set up in 1999 as a wholly-owned subsidiary of Tata Motors, Telcon was hived-off as a construction equipment business of Tata Motors. Subsequently, in 2000, Tata Motors inducted HCM into Telcon by divesting 20 per cent of its shareholding; in 2005, HCM increased its shareholding to 40 per cent.

Telcon, the largest manufacturer of construction equipment in India, is also a pioneer in adopting environment-friendly road resurfacing technology. It has formed a joint venture, Telcon Ecoroad Resurfaces Pvt. Ltd.(TERPL), with HCM, GreenArm Japan, and IVRCL India to promote environment-friendly road resurfacing technology in India.

Telcon posted a turnover of Rs1,305 crore ($ 290 million) in 2005-06, up 40 per cent from 2004-05, and a profit after tax of Rs.89 crore ($ 20 million), up 113 per cent.

For the quarter ended June 30, 2006, the company posted a 43 per cent growth in turnover at Rs.370 crore ($ 82 million) over the corresponding period of the previous year, and a 219 per cent rise in PAT at Rs.31 crore ($ 6.9 million).