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Argentum Motors all set to commence operations in April Print E-mail
Written by Viswanath   
Saturday, 12 April 2008
Argentum Motors, is all set to commence its operations by the middle of April at the 205-acre production facility of the erstwhile Daewoo Motors.  According to reports, the company was looking at a Baisakhi day (April 15) opening .

The company, promoted by former Hyundai President Mr B. V. R Subbu, Mr Ajay Singh,founder of SpiceJet Ltd. and Mr Ashish Deora, a web entrepreneur, acquired the Daewoo's car factory in February 2007 in a bankruptcy auction for Rs. 800 crores.

A real estate buyer contested the claim for the 205-acre property and the case was handed over to the Debt Recovery Tribunal. The Tribunal upheld the award and handed over the assets to Argentum in November.Argentum chief executive B.V.R. Subbu said that the counter-claim was no surprise considering the potential real estate value of the land which is about Rs. 12 crore per acre.

The existing facility at Surajpur has been well maintained despite the two years of non-operation following the exit of the bankrupt Daewoo.The credit goes to the banks and the  800 workers who ensured that maintenance work continued after operations stopped. The assembly lines have been spotlessly maintained with their gleaming CNC machines once used for manufacturing Daewoo's Matiz and Cielo. The facility has a state of the art engine transmission plant and a spic and span 40 Mw power plant that uses heavy fuel oil to produce electricity.The plant will soon power the factory's operations replacing the generators that are currently in use.The facility comes equipped with a modern research and development wing and  test tracks for terrain testing and a sloped speed testing track for small cars.

Mr Ajay Singh, Chairman of Argentum Motors said that the company was setting up a new paint shop and an assembly line to expand the facility's capacity for small cars to 4 lakh an annum.The existing facility, which can produce engines in the size of 1.3-1.7 litre, is being expanded to manufacture the 1.2 litre engine used in small cars.

The company had earlier said that the plant had a capacity to produce 2 lakh car bodies, 4 lakh engines, 4 lakh gear boxes and 35,000 aluminium die castings per annum.

In addition to Rs 120 crore being spent in getting the plant ready for production the company is also investing Rs 80 crore more in setting up a chassis-making plant for trucks in Chennai.

Initially, Argentum Motors will concentrate on manufacturing components with exports mainly to the European market.Mr. Singh mentioned that they were in the final stages of negotiations  with both US and European OEMs (original equipment manufacturers) to manufacture components.During the first year of operations, the company plans to use 25% of its production capacity.

Subbu said that Argentum expects to start making components for engines and transmissions by the end of June.
The company will begin production of sheet metal parts such as doors in the press shop of the factory for export to Europe.

Eventually it intends to contract manufacture cars and commercial vehicles for companies who would like to outsource mamanufacturing to India for their global operations.

Using a business model similar to Magna International Inc., one of the world’s largest auto component suppliers, Subbu has plans to make Argentum the largest independent producer of vehicle power trains, or engines and transmission systems, for passenger vehicles in the country.

As the first step towards achieving this goal, the company plans to start its power plant  and sell the electricity it produces.  As Argentum  will require only 20 MW power to operate the factory at full capacity, there is no doubt that the company stands to earn sizeable revenues by selling half of the 40 MW capacity.Although heavy fuel oil used to produce electricity is more expensive than coal, analysts say that Argentum stands to earn an annual revenue of Rs. 50 crore or more and profits of Rs. 5 crore from this move.

Argentum plans to turn Daewoo’s research and development facility into a hub for global product development work. Ajay Singh said that the R&D wing of the Surajpur facility has all the tools and testing equipment that OEMs would need as they move their operations to India to reduce costs. According to Subbu the company can offer savings of up to $100 million (Rs400 crore) for European car makers.

Argentum is looking towards collaborating with global vehicle certification agencies to facilitate exports of components and products from India. Collaboration with such agencies will make it easier for companies to get their products approved in terms of meeting emission standards and other norms of the country to which they are being exported.

 
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