The Chennai-based Rajsriya Group of Industries is in consolidation mode. Its two arms — Rajsriya Enterprises in Chennai and Rajsriya Automotive Industries in Hosur — cater to a large clientele including Sundaram Clayton, Lucas-TVS, TVS Motor Company, TAFE and Delphi.

At present, Rajsriya Enterprises is the process of being turned into a subsidiary of Rajsriya Automotive Industries. Before the end of this fiscal, both companies will be merged, said P S Govindachari, group managing director, in an exclusive interview to Autocar Professional. The company plans to go in for an IPO in 2007-08, mainly to expand capacities and also enter exports.

At present the group is investing Rs 6 crore — Rs 1.5 crore in Chennai and the balance in Hosur — for capacity expansion. While the Chennai plant will begin manufacture of deep draw components besides increasing overall volumes, a new plant is being set up in Hosur. The Chennai plant expansion is primarily to cater to customer Sundaram Clayton’s new business requirements. Sundaram Clayton has invested Rs 58 crore in a new facility in Ambattur, near Chennai, for manufacture and export of compressors, actuators and valves to US collaborator Wabco.

In Hosur, Rajsriya has recently bought a sick unit close to its existing manufacturing facilities and is modifying it to meet its specific requirements. The new plant has a heat-resistant powder coating plant, which is both cost-effective as well as eco friendly. With the new facility, Rajsriya’s existing powder-coating capacity of 26,000 square feet of surface per day will stand augmented to 36,000 per day. What’s more, the powder recovery system in the new machine eliminates waste to a great extent. According to Govindachari, the plant has been recently commissioned and gradually presses and assembly line will be installed.

The Hosur capacity expansion comes at a good time since the company has received orders from three systems suppliers — two from South India and another from North India — for import substitute products destined for new vehicle models slated for launch by the end of this calendar year. Rajsriya, which recently began supplying exhaust systems in a ready-to-assemble condition to TVS Motor’s XL Super moped, is keen to make headway in exports. While it already exports some products to a couple of non-automotive customers in the US and Hungary, its automotive products have been exported indirectly. The company has targeted the US for immediate growth and is in talks with a large Tier-1 company for supply of a family of pressed components and sub-assemblies.

Rajsriya has recently received Best Supplier award (for pressed components) from Brakes India, Best Practice – Poke Yoke award from Sundaram Clayton and Best 5S Practice award from ABK AOTS. The group, which posted a turnover of Rs 139 crore during 2005-06, hopes to cross the Rs 200-crore mark in 2006-07.