TOKYO -- Construction equipment maker Komatsu will set up a plant in India to produce hydraulic excavators, switching to in-house production to tap into demand related to infrastructure development there.
The factory is slated to begin operating in April 2015 at an existing site in Chennai, where it currently makes dump trucks. The investment is estimated at around 3.4 billion yen ($28.2 million). Equipped with state-of-the-art systems such as automatic welding robots, it will handle both assembly and processing of steel panels.
Annual output capacity of 2,500 units will be expandable to 3,000 by extending hours of operation and adding manpower. The plan is to make 800 or so general-purpose 20-ton excavators in the first year, then expand the lineup to five models ranging from 7-ton to 45-ton varieties, and bring the plant to full operation in fiscal 2017.
Komatsu previously made excavators in India via a 50-50 venture with local engineering company Larsen & Toubro. But the arrangement resulted in restrictions on production models and customers, the Japanese company dissolved the joint business in April 2013, selling its stake to L&T. Since then, Komatsu has outsourced production to the Indian partner.
Now, by bringing the production in-house, Komatsu will make its own excavators while entrusting sales operations to L&T. By focusing on their respective strengths, the two will work to expand the business.
Located in India's southeast, Chennai has major port facilities. Komatsu exports its dump trucks to Africa and elsewhere. The excavator plant will focus on the domestic market for the time being, but Komatsu plans to eventually develop it into an export base for the African and Middle Eastern markets.
In the Indian market for hydraulic excavators, Hitachi Construction Machinery, which has a joint venture with Tata Motors, commands the top share of nearly 40%. Komatsu comes in second with roughly 20% of the market.