Mitsubishi Heavy Industries to source power tools from India

Chennai: Even the Japanese have woken up to India''s potential as an outsourcing hub — this time for precision tools. Mitsubishi Heavy Industries India Precision Tools Limited (MHI -IPT), may be just one of those 40 companies in the Mitsubishi Heavy Industries, but the Japanese group hopes to use it to propel its global market share in precision tools among the top three globally.

"Hitherto, only Japan, Europe and the US had the distinction of producing world class cutting tools, but India has joined that list," said Hidetaka Horioka, managing director, MHI-IPT while addressing the media in Chennai today. The cost and quality advantage offered by India is going to drive `global'' exports from this company, he added.

The company got its Indian presence with the acquisition of Chennai-based SRP Tools in 2005, which was the first ever merger and acquisition by a Japanese company in India.

SRP Tools, which set up its first factory in 1965 to manufacture cutting tools, had got technology collaboration from Mitsubishi Heavy Industries by 1974. Since then the company established its brand firmly in the Indian market. It had set up a factory in Ranipet (120 kms from Chennai) and before getting sold to Mitsubishi had a turnover of Rs20 crore and a workforce of 270.

Sensing the huge domestic market requirements for precision tools, the Japanese company decided to double existing capacity by investing Rs50 crore towards setting up an additional plant in the same premises.

In India, the automobile /tractor segment is a key client base, all of which are on an expansion mode. Besides, there were a number of new car manufacturers in the market to target.

"We sense that the Indian market will far outgrow the Japanese market in this segment," remarked Horioka, who is impressed with the fact that the Indian car market touched one million units in 2003 and doubled this in three years and is expected to double again by 2010.

The Indian two-wheeler market is also the second largest in the world with 7 million units. "With the auto segment growing at the rate of 15-20 per cent CAGR there is a rising demand for high quality gear cutting tools and reduced delivery lead times, hence the expansion," he explained.

The acquisition by Mitsubishi had naturally ensured the bringing in of the latest technologies in the new state of art fully air-conditioned plant - a definite advantage to the new entity from global competition.

By 2008, sales of hobs, shaper cutters, broaches, master gears, broaches (which are the products of the company) will lead to a quadrupling of the company''s turnover since acquisition.

By 2015, 50-per cent of the company''s production would be exported and the turnover would be more than Rs200 crore. Last year the company had clocked Rs36 crore and this year hopes to achieve Rs60 crore.

Currently, the company is having its hands full with the domestic market (this year exports would be 4 per cent of turnover) and the capacity addition would take of immediate growing requirements in the domestic front. However, it has plans to set up more plants, which would come up in North India at a later date.