Friday, May 20, 2005
Friday, May 20, 2005 |
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Visakhapatnam
Santosh Patnaik
VISAKHAPATNAM: The car unit proposed by the German auto major, Volkswagen (VW), is bound to add brand value to Visakhapatnam. The uncertainty notwithstanding, the Congress Government is confident that VW will set up its unit near Vizag. Though in some quarters, there is scepticism that the much-hyped VW project will turn into another Proton (of Malayasia), the Minister for Major Industries, Botsa Satyanarayana, after his recent visit to Wolfsburg in Germany, declared that the Andhra Pradesh Government was ready to offer 400 acres in Agnampudi. However, there are positive indications to suggest that the VW is keen on coming to Vizag. The only dampening factor for the auto major seems to be lack of ancillary units unlike in Pune and Coimbatore. Except Synergies Dooray, which manufactures alumina wheels for four-wheelers, no other unit useful for a car factory is located in and around the city. According to estimates, it will take 18 months to have all the required ancillary units after establishing a greenfield car factory. The VW, which had a revenue of Euro 88.96 billion in 2004 seems to be exploring two options.
Partner
Industry sources say that it was trying to find out a strategic Indian partner to set up the unit near Vizag so that its monetary investment will be negligible, barring the use of its brand name. Another option is said to be shifting its factory in Brazil and ship it to Vizag piece-by-piece. The car major is also not expected to pit its brand against the Nasik-based Skoda Auto which produces Skoda Octavia and Skoda Superb -- all `D' class and premium segment cars. Hence, its Vizag unit may produce `C' segment cars, costing around Rs. 10 lakhs, with a big eye on the export market in South East Asia and Gulf.
Red carpet welcome
Even after expressing its willingness to roll out a red carpet welcome to the German auto major, the VW management appears to have decided to adopt a cautious approach. As it is listed on the New York Stock Exchange, first it has to inform Wall Street regarding its plans in Andhra Pradesh, once it takes a decision to set up a factory near Vizag. Till a formal decision by the VW, it is going to be an agonising wait for the State Government.
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