The Hindu : Business : TVS Motor’s Indonesian plant starts production

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Tuesday, Jul 17, 2007
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TVS Motor’s Indonesian plant starts production

N. Ravi Kumar

President Susilo Bambang Yudhoyono inaugurates the plant

— Photo: S. Muralidhar

LOOKING EAST: Venu Srinivasan (left), Chairman, TVS Motor, with Susilo Bambang Yudhoyono (right), President of Indonesia, at the PT TVS Motor’s factory in Karawang, near Jakarta.

JAKARTA: Commercial production at TVS Motor Company’s first overseas plant — around 60 km from here at Karawang, West Java — was formally launched on Monday by Indonesian President Susilo Bambang Yudhoyono.

Speaking at the function on the sprawling facility, TVS Motor Company India Chairman Venu Srinivasan said: “We have chosen Indonesia as our centre [export hub] for the ASEAN region ... because we think that this country has great deal of potential, most importantly human resources.” Besides the ASEAN region, vehicles manufactured at the plant would be exported to Africa and South America, he said.

The Karawang plant of PT TVS Motor Company Indonesia, on 20 hectares of land, is for manufacturing models of TVS Neo step-through motorcycles. The annual capacity of the plant is three lakh units. Step-through models, known locally as Bebeks, account for an overwhelming chunk of the Indonesian two-wheeler market that is estimated to be in the order of five million units.

“Our initial investment [on the facility] is about $50 million, with local value addition of 40 per cent at start up. This investment will be scaled up to $100 million over the next three years to achieve local value addition of 80 per cent,” Mr. Srinivasan said. A research and development facility forms a part of the plant.

Noting that 200 employees were employed at the plant now, he said the number would increase to 1,000 when the plant starts producing to its capacity. The plant would indirectly generate job opportunities for 11,000 people.

Talking to a group of journalists from India (whose trip was arranged by the company), PT TVS Motor Company Indonesia’s senior executives, including President Commissioner Nihal Kaviratne and President Director BLP Simha, said over the next five years 20 per cent of the turnover would be from exports.

Mr. Simha said the vehicles would be launched shortly and as the company’s entry into new markets in Indonesia would be preceded with the setting up of sales and service dealerships that would also be stocked with adequate spare parts. On the sales estimates, he said the company intends selling one lakh vehicles this financial year.

At the function, the Indonesian President expressed a hope that the company would continue to grow and contribute to Indonesia’s economy. He also underlined the significance of enhanced cooperation between India and Indonesia.

The Minister of Industry Fahmi Idris and several senior Indonesian government officials participated in the function. Indian Ambassador to Indonesia Navrekha Sharma said many more Indian companies, in various fields, including IT, infrastructure, banking and automobile, were planning to foray into Indonesia after TVS.

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