NEW DELHI: Auto component major Sona Group’s arm Sona Okegawa Precision Forgings will invest $10 million to set up a greenfield gear facility in North America.
Sona Group chairman and managing director Surinder Kapur said, “We are in talks with a few southern states in North America for land for the proposed facility. A decision on this will be taken by the end of this year.”
The greenfield facility is likely to have a capacity of 5 million units per year. Sona Okegawa, which manufactures bevel gears and pinions, has manufacturing plants in Haryana and Chennai and an export-oriented unit in Pune. The company is Sona Group’s 60:40 joint ventures with Mitsubishi Materials Corporation.
Sona Group has been looking at North America for opportunities for both Sona Koyo Steering and Sona Okegawa for over a year now. Mr Kapur, however, ruled out an acquisition in the region for the time being.
“North America is an important automotive market and we want to be a significant player here. Also, the region offers a lot of incentives to those setting up facilities. However, the labour situation is so bad that we don’t want to inherit it with an acquisition. Moreover, the companies that we wanted to acquire were not available for acquisition. So we have decided to set up a greenfield facility to cater to the customers in the region,” he said.
“For the Sona Group, the target is to achieve 45% of revenues from overseas by 2010,” Mr Kapur said.
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