Synergies Castings, one of India's leading aluminium alloy wheel manufacturers, has signed an MoU with the government of Andhra Pradesh to set up a greenfield aluminium casting and specialty alloy wheel manufacturing plant in Visakhapatnam.
The new unit will have an annual production capacity of 2.4 million wheels, benchmarked at 18-inch wheel size, along with sophisticated casting, machining, painting facilities with embedded digital manufacturing technologies. Capacity is scalable to 5 million units in phases.
The company is to invest around $100 million (Rs 631 crore), which will be financed by the existing shareholders, accruals and bank debt.
Synergies Castings is optimistic on demand coming from the Indian auto industry, which is currently registering smart growth, and the increased penetration of alloy wheels in India.
Shekhar Movva, president, Synergies Castings said “As customer requirements become exceedingly stringent, there is a need to invest in substantial capex for sophisticated production, testing and development facilities. It is important to scale up and tech-up to remain competitive. While we have evaluated several manufacturing location options in the country, we believe that Vizag, and the terms of engagement with the state of Andhra Pradesh offers the best opportunity to be the most competitive manufacturer of alloy wheels in the country. Further, with GST, there is no penalty of moving goods across geographies and thus large-scale manufacturing makes sense.”
The alloy wheel manufacturer says that together with its ancillaries, it aims create more than 2,000 skilled jobs in the region. The announcement comes on the back of its strategic growth plan to expand its operations, which aims to achieve 6-million-wheel capacity by 2022-23. This will come through the new project and the new greenfield plant being built in Oman.
“We are committed to being the technology and market leader in India and are investing significantly in new casting, forming, finishing and automation technologies to retain this leadership,” added Movva.
Andhra Pradesh, which is emerging as a major auto hub in the country, has attracted an investment of $3.7 billion (about Rs 25,000 crore) under new investments from the automotive industry. Kia Motors, Isuzu Motors, Hero MotoCorp, Apollo Tyres, Bharat Forge and Brakes India among others are the other major investors in the state.