Telcons Kharagpur unit starts production

Written by Arindam Sinha | Jamshedpur | Updated: Jan 21 2010, 07:32am hrs
Telco Construction Equipment Company Ltd (Telcon), the 60:40 joint venture between Tata Motors and Hitachi Construction Machinery Co Ltd of Japan, quietly commenced production at its new unit in Kharagpur last month. The company will produce 35-tonne rigid dump trucks as well as excavators of 20 to 45 tonne capacity there initially.

While the excavator assembly line of the new unit had a low-key inauguration on December 4, 2009, by Tata Motors vice-chairman-cum-Telcon chairman Ravi Kant and Hitachi Construction Machinery CEO Michijiro Kikawa, who is also a Telcon director, the dumper assembly line was inaugurated the same day by Tata Motors managing director P M Telang and Mitsuo Mori, senior vice-president and executive officer, Hitachi Construction Machinery, who too is on the Telcon board.

With the addition of the new unit at Kharagpur, which has come up on around 250 acres, Telcon now has manufacturing base in three places including Jamshedpur in Jharkhand) and Dharwad in Karnataka.

The construction equipment major has handled rehabilitation issues amicably by way of working closely with the land owners on whose land the project has come up --- offering training first to those employable in the families and promising employment at a later date.

Speaking to FE here recently, Telcon managing director Rana Sinha said taking into account the economic slowdown in North America and Europe, the Kharagpur plant has been conceived to come up in three phases. The work of the first phase, which would witness the rolling out of 3,0004,000 construction sector equipment in financial year 2010-11, has been completed at a cost of around Rs 270 crore.

The December 4 inauguration had also seen the first sales of an excavator and a dumper, both assembled at the new plant.

On completion of the entire project by 2011-12 at an investment of around Rs 565 crore, Telcons Kharagpur plant will be able to roll out around 12,000 construction equipment. Orders for plant & equipment (for phases II and III) have already ben placed, added the Telcon managing director.

According to Sinha, while North America would continue to be down in 2010 by 20% (from 2009), Europe will be down by 20-25% and Japan by around 15%.

India, China and Brazil, however, are seen to be countries which would witness growth in all sectors including the construction equipment sector in 2010.

The construction equipment market in India is expected to grow by around 15-20% in 2010-11, said the Telcon managing director, adding that overall the construction equipment industry would not show negative results for 2009-10, as the second half has shown some growth.

Telcon is expecting to register a growth of around 9 to 10% in 2009-10. It is likely to log sales of 5,500 plus equipment units during the current year, while its 20% growth plans for 2010-11 is likely witness the sale of around 7,000 units.

Landmark partnership with Hitachi Construction

In a global scenario where cross cultural joint ventures (JVs) have been seen to last only around eight years on an average, Telco Construction Equipment Company Ltd (Telcon), the 60:40 joint venture between Tata Motors and the Hitachi Construction Machinery Co Ltd (of Japan), recently celebrated its 25 years of partnership.

According to Telcon managing director Rana Sinha, a research undertaken by Harvard Business Review on cross cultural differences & joint venture (JV) longevity had seen the average eight-year lifespan of such joint ventures, with break-ups happening for various reasons.

The relationship with Hitachi (Construction Machinery Co) is 25 years old now; we started in 1983-84; of course, financial participation has happened only in 2000 as prior to that it was a technical collaboration, said Sinha.

Top officials of both the joint venture partners, who had been to Kharagpur to inaugurate the new unit there on December 4, met in Jamshedpur on December 5, 2009, to celebrate the silver jubilee of the partnership.

Generally, something or the other comes in the way of such JVs and the partners part ways, added the Telcon managing director.

Among the cross cultural joint ventures which did not last long in India have been Tata Timken Ltd, where Tata Steel had to sell its stake to Timken Inc of US, Tata IBM (now IBM India) which was to produce and market IBM products in India, etc.