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Japan's Kobelco to set up unit in Chennai

The Economic Times:  July, 2010

Chennai: Japan’s Kobelco Cranes, a subsidiary of Kobe Steel, said it will set up a plant near Chennai to produce crawler cranes. This will strengthen Kobelco’s involvement in the Indian market, which is anticipated to grow rapidly in the future.

Entailing an investment of 1.2 billion yen (Rs 60 crore), the plant is to begin production in October 2011. It will come up in the Sri city special economic zone, about 75 km north of Chennai. The facility will come up near Kobelco Construction Machinery’s hydraulic excavator plant. The excavator plant is currently under construction and will begin production in January 2011.

The close proximity of the plants will enable the two companies to share distribution and information, which will increase the business efficiency of their Indian operations, the company said in a statement. Kobelco is Japan’s top manufacturer of crawler cranes, with about 50% share in the domestic market. The new Indian plant will be Kobelco’s first overseas production facility. In addition, among the world’s major mobile crane makers, Kobelco will be the first foreign company to own a facility that specialises in the manufacture of crawler cranes.

Next month, Kobelco Cranes plans to establish a subsidiary Kobelco Cranes India (KCI). When the crawler crane plant is completed in 2011, it will manufacture crawler cranes ranging from 90 to 250 tonnes.

The world market for crawler cranes saw a temporary drop in demand following the financial crisis in 2008, but after hitting the bottom, demand began to pick up again. In addition, the markets in Japan, the US and Europe, which, in the past, comprised a 40% share, saw demand fall to only about 20%.

On the other hand, India, China and other emerging countries saw a rapid increase in demand. The Indian market for crawler cranes, which reached about 200 units in 2009, is anticipated to grow rapidly to 700 units in the next five years on the back of strong infrastructure investment.

The production of crawler cranes in the over-100 tonne class, a category in which Kobelco is focused, will enable it to maximise the advantages of local production while accurately grasping user needs.

By rapidly responding, Kobelco Cranes aims to further meet demand and strengthen its presence in the Indian market.