2012 NCR Special: Krishna Group inks JV to make CNG, LPG kits

Joint ventures and M&As seem to be the flavour of the season. In line with this trend, the Gurgaon-based Krishna Group has inked an equity joint venture with Landi Renzo S.p.A of Italy last month for the manufacture of CNG and LPG kits locally for automotive applications. Landi Renzo is a global leader in the manufacture of CNG and LPG kits and leads with a 35 percent market share worldwide.

A new product stream for the Krishna Group, the JV will facilitate design, development, manufacturing and distribution of the CNG and LPG kits in India. According to Ashok Kapur, chairman of the Krishna Group, this will be the first time in the country that these kits will be manufactured locally as most of the automotive players today import and assemble CNG-LPG kits in India. With CNG proving to be a viable alternative to petrol and diesel, it has its advantages as it checks pollution and is environment friendly compared to other fuels.

Meanwhile, the joint venture company Krishna Landi Renzo will set up a manufacturing facility in the Gurgaon-Manesar belt, with plans to expand to other parts of the country as demand picks up.

An investment of around Rs 100 crore is being envisaged in phases in development of the new production unit with funding through the internal accrual and debt route. Production capacity in the first phase is pegged at 100,000 units by 2013-14 that will be stepped upto 250,000 units by FY’17 when the business is expected to generate a revenue of Rs 700 crore. The business is likely to accrue in a revenue of Rs 50 crore in the first financial year of operations.

The plant that will go on stream by the year end will generate employment for about 100 people in the first phase and 200 in phase II.

The JV will cater to the CNG and LPG requirements of OEMs in the passenger car segment initially that will be later extended to cover commercial vehicles as well. Major customers are expected to be Maruti Suzuki with whom the Group has a joint venture and when the plant is at full capacity, the carmaker is expected to account for 60 percent of its business. Other clients are likely to be General Motors, Ford India, Mahindra & Mahindra and Honda Cars India. The Rs 3,000 crore Krishna Group manufactures seats, door trims, plastics, mirrors, fuel tanks, exhaust systems, gear shifters, and suspensions among others.

SHOBHA MATHUR