Neolite to commission two plants

Dropping its earlier plan to consolidate its business in and around Delhi through setting up of a single huge plant, Delhi-based Neolite Industries will now set up two new plants for automotive lighting as part of a fresh strategy. One will be commissioned in Uttaranchal by March 2007 while the other is expected to come up in the special economic zone (SEZ) to be set up by the Reliance group in Gurgaon. This will be the second Neolite plant to be set up in the SEZ region, the other being in Noida.

The company has five plants in operation. Apart from Noida, it has two units in Gurgaon of which one is solely into sheet metal parts. It also has two in Mayapuri, Delhi. Neolite makes around 1,500 different kinds of lighting products and has 200 customers worldwide. “We must also be the largest exporter of lighting in India exporting to almost 90 countries,” says Rajesh Jain, managing director.

According to him, the decision to move to Uttaranchal was consequent to Tata Motors deciding to set up shop in the State. “We were in two minds about this and were planning to consolidate our business. The idea then was to reduce the number of plants but now we are adding more. Initially, the idea was to bring all our manufacturing facilities in one place but this did not quite work,” he adds.

The Uttaranchal facility will cater to Tata Motors’ Ace, Mahindra & Mahindra and the aftermarket. Other lighting companies like Lumax are also setting up a plant in the region to cater to the Ace. “M&M has two plants in Uttaranchal: one is in Rudrapur for tractors while Haridwar houses production of the Champion three-wheeler. This is an area we will expand into,” Jain says.

This is not all. Neolite has figured out that its export markets have been evolving in a rather unexpected way. “Earlier, we moved to the aftermarket in developed countries and thereon to big brands like Hella. Gradually, our turnover began increasing from developed countries,” he adds.

In the last year-and-a-half, a major portion of business has begun coming from Australia, Europe, Japan and the US with OEMs accounting for a large chunk. “We cater to Piaggio in Italy and John Deere in Germany apart from a host of truck cabin makers. Exports account for around 50 percent if we include home lighting,” Jain says. Neolite supplies its non-automotive lamps to Swedish company Ikea.

While acknowledging that there will be need for creating greater capacity in the future which will call for more investments, he has still not made up his mind on going in for a private placement or an initial public offering.