Talks with Hitachi, the long-time partners of Telco Construction Equipment Company, are at an embryonic stage. Senior officials here declined to comment on the proposed investment of Hitachi in the company to pick up a part of the Telco stake in the venture.

Confirming this, Telco Construction Equipment Company branch manager Suresh Nair told The Financial Express that discussions with Hitachi were on for some time.

It is learnt that a part of funds raised by offloading the Telco stake would be used for its Dharwad plant which is likely to go on stream in September this year. However, the company's executive director Sarosh J Gandhi was not available for comment on theissue.

Currently, Telco Construction Equipment is a wholly-owned subsidiary of Telco. The construction equipment division, which had clocked a sale of Rs 377 crore in 1998-99, was hived off into a subsidiary on April 1, 1999. The division had sold 1,074 machines during the last fiscal.

The Tatas are investing around Rs 70 crore in its Dharwad manufacturing unit in Karnataka. With the new unit slating to be commissioned in September, Telco Construction Equipment would begin production of its three models in Dharwad.

``To start with we will start assembling the machines in the new facility. The unit will have a capacity to produce 1,500 excavators per annum,'' a top company official said. The Dharwad unit is likely to house the manufacture of high capacity products.

Earlier the group had scaled down the Dharwad project cost to Rs 70 crore from Rs 300 crore due to economic slump. It had also decided to retain the research and development (R&D) centre at its Jamshedpur facility. At present Telco spendsabout 6-7 per cent of its total turnover on R&D.

The official said Telco Construction Equipment was also planning to launch products like mining equipments, road making machines, dozers, etc in the country.

Recently, Telco launched its new mini excavator - TMX20, the `power digger' in Bangalore. The new product is fitted with Tata 483DL (Tata Sumo Engine) and can be transported through a tractor or carried on a Tata 407 mini truck. Telco is said to have a 95 per cent marketshare in mini excavators in the country.

The company officials claimed that it was the first indigenously designed mini excavator and the smallest excavator availabe in the domestic market. TMX20 is useful for plantations, agriculture, telecom, municipalities and can be used for digging, trenching, pitting, levelling, root removal, etc.

To part-finance the new product to its customers, the company is entering into alliances with Nabard, Karnataka State Financial Corporation, Spices and Coconut Boards and Campco in Mangalore. TelcoConstruction Equipment Co is also planning to offer dealerships for service and spare parts of its products.