Lumax drafts expansion plan

IPO to fund new plant, capacity increases, modernisation and greater stress on research and development.

Autocar Pro News DeskBy Autocar Pro News Desk calendar 15 Feb 2007 Views icon7150 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Lumax Auto Technologies (LATL) has announced a Rs 48 crore plan that will include a new facility in Pantnagar, Uttaranchal and capacity increases and modernisation of existing facilities in Manesar, Haryana; Bhosari, Chakan and Wajuj in Maharashtra. The company has earmarked Rs 23 crore for a new automotive lighting unit in Pantnagar. This will be set up by Lumax DK Auto Industries (LDK), a subsidiary of LATL. This plant will manufacture 500,000 sets, per annum, of head and taillights, front and rear blinkers and windshields for Bajaj Auto (BAL).

The existing facility in Manesar is being enhanced to include a new line to manufacture 2.7 million headlamp levelling motor units per annum. LAT has set aside Rs 5 crore for this and a large portion of this capacity is tied in with Maruti Udyog’s expansion. The other major component of the company’s growth plan is the setting up of a chassis assembly unit in Bhosari near Pune. This unit will cater to BAL’s scooters and scooterettes and is in line with its move to push Tier-1 component suppliers into becoming system suppliers. LAT is investing Rs 12 crore in this unit.

The expansion and modernisation of existing facilities at Chakan and Waluj completes LATL’s plans. The company’s Chakan unit will now include an in-house painting plant. The Waluj unit is being upgraded to house a robotic welding system for the Bajaj’s CT100, Platina and Wind 125 frame assemblies. Total capacity here is expected to go up 20 percent with the new installation. “These projects will be funded through a mix of public equity, internal accruals and term loans,” said DK Jain, chairman and director, LATL, announcing the company’s initial public offering (IPO), which opens on December 14.

This IPO will account for Rs 22.59 crore of the new projects, with private placement (Rs 7.76 crore), term loans (Rs 19 crore) and internal accruals (Rs 91 lakh) making up the rest of the Rs 50 crore outlay. Over 80 percent of LATL’s production of lighting assemblies and sheet metal and fabrications is consumed by BAL. On the four-wheeler side, LDK supplies 65 percent of Maruti Udyog’s requirement of gear shifters from the Manesar facility.

Besides expanding capacity for its existing businesses, LATL is also focused on the future and is setting aside Rs 1.15 crore to modernise its development centre in Chinchwad near Pune. The company plans to focus on developing chassis and component systems in aluminium to replace ferrous items. On the anvil is the development of silencers and exhaust systems for 3- and 4-wheelers. The company has entered into a tie-up with Cornaghia, of Italy, for the technical, design and development aspects of mufflers and silencers.

The investment in the R&D centre will equip it to handle the design of jigs, fixtures, tooling and gauges. “We intend to involve ourselves at the design stage of our customers. This will ensure cost-effective manufacturability and reduce development lead time,” Jain said. Although most of the new investment is tied in with Bajaj Auto’s plans – the company accounts for 90 percent of LATL’s revenues – Jain was quick to downplay the reliance. He said that the explosive growth in two-wheelers presented an opportunity in the replacement market as well.
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