Rico Auto forms JV with Chinese co
Rico Auto has signed a joint venture with a Chinese company ,Zhejiang Jinfei in order to have a bigger share of the growing alloy wheel market, In the joint venture, Rico has invested about Rs.60 crore, to manufacture aluminium alloy wheels for two-wheelers and likely to invest Rs.120-150 crore to expand capacity.
According to MD Rico Auto Industries,: "The alloy wheels segment in growing in a big way. Most two-wheelers have alloy wheels, the reason we chose to enter into a joint venture'" The manufacturing plant will be set up in Haryana and would start production in 2008. In the new joint venture, Rico would hold majority stake of 92.5%, while the balance would rest with Chinese partner JINFEI which will have the option to increase stake to 25%. "The Haryana plant will be set up with an initial production capacity of about 1 million units," he said.
The JV partners are conemplating on increasing the capacity to 5 million units.Mr Kapur,MD,RICO Auto Industries Said, "We would be investing Rs.25-30 crore per million as we expand capacity'" The joint venture is largely to cater to the domestic demand. The Auto components manufacturer is also exploring the opportunity of the overseas acquisitions.
JINFEI ,China had started manufacturing aluminium alloy wheels in 1995 and is a key supplier to Suzuki,Honda & Yamaha and other OEMs. The company's last year turnover was approx USD 280 millions.
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