Mitsubishi inks JV with VTTL for diesel engine manufacturing unit
Written by Arjun   
Saturday, 28 July 2007
BANGALORE: Japanese firm Mitsubishi Heavy Industries, Ltd. (MHI) has entered into an agreement with V.S.T. Tillers Tractors Ltd. (VTTL), a tiller and tractor manufacturer in India, to jointly establish a company, named MHI-VST DIESEL ENGINES PRIVATE LIMITED, to manufacture and sell small-size diesel engines.

 The JV will be capitalized at 415 million rupees (approximately 1.1 billion Japanese yen), with MHI owning 90% and VTTL 10%. The unit will be established in Mysore, Karnataka, located some 150 km southwest of Bangalore, the state capital, where VTTL's head office is situated. The JV will build a new plant targeted for completion in November. Initially, it will start with 60 employees, to be expanded to about 145 three years later.  The JV plans to commence knockdown production in December 2007 and will gradually increase local content ratio. Initially, the JV will have a capacity to produce 30,000 units per annum.

 Under license from MHI, MHI-VST Diesel Engines will manufacture, sell and service engines with displacements in the range of 640 cc (cubic centimeters) to 1,760 cc (rated output: 4.7 - 36.8 kW). The first unit will be completed in December this year. The advanced engines manufactured at the JV will be sold in India and neighboring countries under the "MITSUBISHI" brand name.

 VTTL and MHI have a long relationship of financial and technical collaboration. VTTL has sufficient technical skills and know-how for engine production as the company has been manufacturing older type small-size engines licensed by MHI and machines and sells major engine parts. VTTL, established in 1967, employs a staff of about 500.

 The size of India's market for small-size engines (below 50 HP, or approximately 36.8 kW) is currently 500,000 units a year. In India, imported finished engines are very few, and two major local companies enjoy the majority share of the local market. Among other engine types, the new JV will also introduce lightweight, compact size, high-power 3,000 rpm engines that are currently sold in limited quantities in India, to challenge this rapidly growing market.
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