MICO to invest Rs 6 bn to set up CRDi plant

MICO India, the country's leading auto component manufacturer, is looking at investing Rs 6 billion in setting up a CRDi facility in India. The Common Rail Direct injection (CRDi) is one of the most advanced diesel technologies in the world, which combines both performance and fuel economy.

The company is looking to set up a plant for the manufacture of CRDi engines, considering the demand for diesel vehicles in the country and several leading car manufacturers like Mercedes and Hyundai introducing CRDi diesel version cars. The company also foresees commercial vehicles in the country running on CRDi diesel engines in the near future.

The technology was pioneered by MICO's parent Robert Bosch of Germany. Bosch, the world's largest suppliers of automotive technology with patented products in fuel injection technology, has a 61-per cent stake in MICO. Worldwide, Bosch is the largest player in CRDi with over 75 per cent of the market, followed by Siemens VDO, Delphi (Lucas) and Denso.

In the initial stage, MICO would import CRDi kits and sell them in India. According to sources, MICO will set up a CRDi facility after ascertaining the demand potential and the likely payback period on the investment. Currently TVS Lucas is the only competitor in India.

With the advent of new technologies in developed markets, Bosch Worldwide is shifting older generation products to MICO India. It is expected that due to the relocation of older generation products to India for manufacturing, MICO India may see a substantial growth in exports over next two years.

Bosch has designated MICO as its sole base for manufacturing several products and related R&D activity. MICO has a wide distribution network of over 4,000 authorised dealers in India. In diesel injection, the company is the monopoly supplier in India, which derives 41 per cent of revenues from the supply of diesel fuel injection systems and spark plugs to the CV and tractor industries.

The company is the second largest auto component exporter in India. It exports components for the complete range of fuel injection equipment, parts for gasoline engines, spark plugs and auto electricals.

Given its leadership position in fuel injection technology, MICO stands to benefit the most from India''s outsourcing story and its sustained upturn in the user industry (CVs, cars, utility vehicles and recovery in tractors) volumes. Aggressive initiatives on the export front is an excellent strategy to hedge against any domestic down-turn.