MHI to Establish Small-size Diesel Engine Manufacturing JV
In India with VTTL
Tokyo, July 26, 2007 - Mitsubishi Heavy Industries, Ltd. (MHI) has agreed with V.S.T. Tillers Tractors Ltd. (VTTL), a tiller and tractor manufacturer in India, to jointly establish a company, named MHI-VST DIESEL ENGINES PRIVATE LIMITED, to manufacture and sell small-size diesel engines. The move is aimed at making a full-scale entrance into India's rapidly growing small-size diesel engine market and firmly establishing a foundation as a leading player in the area. In India, the market for engine-based diesel generator sets is rapidly expanding due to a sharp increase in demand for power supply to cellular phone base stations and chronic power shortage. The JV plans to commence knockdown production in December 2007 and will gradually increase local content ratio. Initially, the JV will have a capacity to produce 30,000 units per annum.
Under license from MHI, MHI-VST Diesel Engines will manufacture, sell and service engines with displacements in the range of 640 cc (cubic centimeters) to 1,760 cc (rated output: 4.7 - 36.8 kW). The first unit will be completed in December this year. The advanced engines manufactured at the JV will be sold in India and neighboring countries under the "MITSUBISHI" brand name.
The JV will be capitalized at 415 million rupees (approximately 1.1 billion Japanese yen), with MHI owning 90% and VTTL 10%. The unit will be established in Mysore, Karnataka, an ancient city located some 150 km southwest of Bangalore, the state capital, where VTTL's head office is situated. The JV will build a new plant targeted for completion in November. Initially, it will start with 60 employees, to be expanded to about 145 three years later.
VTTL and MHI have a long relationship of financial and technical collaboration. VTTL has sufficient technical skills and know-how for engine production as the company has been manufacturing older type small-size engines licensed by MHI and machines and sells major engine parts. VTTL, established in 1967, employs a staff of about 500.
The size of India's market for small-size engines (below 50 HP, or approximately 36.8 kW) is currently 500,000 units a year. In India, imported finished engines are very few, and two major local companies enjoy the majority share of the local market. Among other engine types, the new JV will also introduce lightweight, compact size, high-power 3,000 rpm engines that are sold very few in India, to challenge this rapidly growing market.
Business contact: General Machinery & Special Vehicles