Setco to set up third plant next year

Setco Automotive, the biggest manufacturer of premium clutches for medium and heavy trucks in the country, is betting big on its exports business.

In order to keep pace with the export-oriented demand it is looking at setting up its third plant in India by the next year, Shvetal Vakil, executive director of the company, said.

Currently, exports account for 7% of Setco’s revenues, which the company plans to increase to 15% by fiscal 2012.

The clutch maker has a global presence with facilities in the US and the UK and is in process of addressing the replacement markets in the UK, the US, Middle East and Africa.

“In order to keep the momentum going on the export front, we are scouting for land in an SEZ and will invest around Rs 15 crore for the plant which has to come up by next year,” Vakil said.

In the last financial year the company exported components worth Rs 12 crore and this year it expects to treble the number as it has developed new products for Tata Motors world truck and Daimler, which have applications in Europe as well.

The company is also planning to set up an assembly line in Africa for which it may scout for a local partner.

Vakil said, “We are in the process of identifying where to position ourselves in the African market.” Setco has been making acquisitions and has subsidiaries in the US and Europe.

Harish Seth, chairman and managing director, Setco, said by 2011 the company will look at more acquisitions in these countries as better technology is available there. In 2005, it made its first technology-motivated buyout when its UK arm took over the Lipe Clutch division of the US-based Dana Corporation for Rs 16 crore.

While its subsidiaries are doing well, Setco’s joint venture formed in 2009 with FTE Automotive GmbH of Germany and christened Setco FTE Automotive has failed to take off due to global recession.

Vakil said as per agreement the joint venture was supposed to set up a plant in Kalol, Gujarat, but now the plan has been put on hold and the JV operations have been deferred.

 “FTE is reeling under the crises that hit the European market, which is not showing any signs of revival. It was decided then that we will instead import components from FTE to feed the demand in the passenger car market in India. Till the time FTE gets back on its feet we will not set up a plant in India. The JV is yet to kick off,” Vakil said.

So far the company has imported components worth Rs 7 crore from FTE.
Setco, which has so far only being supplying to medium and heavy commercial vehicles is also lining up capex to get into the LCV business.

 It will spend Rs 100 crore in three years for product development, capacity expansion and penetration into the LCV market.