Mahindra-Ideal Group to commission US $ 50mn vehicle assembly plant in June

India’s leading auto manufacturer Mahindra & Mahindra Ltd and Sri Lanka’s Ideal Group (Pvt.) Ltd will this June commence operations of its US $ 50 million vehicle assembly plant located in Horana, targeting the Sri Lankan market and future exports to the region.

The plant will assemble 100 units of 1200cc Mahindra KUV100 per month, with 35-40 percent local value addition initially, which will expand gradually to 1,000 units, reaching the full capacity of the plant. Mahindra & Mahindra will have a 35 percent stake in the plant, while Sri Lanka’s Ideal Group will have 65 percent.

Speaking to the reporters on the sidelines of the launch of Mahindra Treo – the all-electric three-wheeler in Sri Lanka and BS-4 (equivalent to Euro 4 standards) emission norms-compliant vehicles in Sri Lanka yesterday, Ideal Group Deputy Chairman Aravinda de Silva said that component manufacturing is the starting point for manufacturing vehicles locally in the future.

Ideal Group, together with Mahindra & Mahindra, plans to manufacture vehicle seats, which will have the ‘Made in Sri Lanka’ tag, while manufacturing batteries and tyres are also on the cards.

Given the relatively small market in Sri Lanka, de Silva stressed that market facilitation through free trade agreements (FTAs) is essential for auto exports. “That’s why we need FTAs with Bangladesh, Pakistan and African countries. The more FTAs we have, it will open up the market for us because Sri Lanka is a relatively small market for a manufacturer,” he said.

He went on to note that Sri Lanka needs to focus on exports and the potential technological transfers in the Sri Lanka-Singapore FTA, which has become politicised.
“There are advantages and disadvantages but at the end of the day, if you have an FTA, it opens up opportunities and people who are talented can compete in the world market. We should grab that opportunity,” he said.

Through the extensive network of Mahindra & Mahindra established across the world, Ideal Group is eyeing to export the assembled vehicles to neighbouring countries as well as African counties, where the demand for automobiles is growing. The plant is estimated to create 250 employment opportunities in Sri Lanka initially.

While welcoming the joint venture between the two parties, the chief guest of the occasion, Development Strategies and International Trade Minister Malik Samarawickrama said that these initiatives would produce more skilled workers in the country, which has been identified as essential for Sri Lanka’s economic growth.

Meanwhile, Mahindra & Mahindra Chief of International Operations Arvind Mathew said that the setting up of a vehicle assembly plant in Sri Lanka symbolises Mahindra & Mahindra’s commitment in supporting Sri Lanka to develop the country.

Mahindra has an over 50 percent market share in the above one tonne vehicle category in Sri Lanka, while it has a 35 percent market share in the below one tonne vehicle category.

Ideal Motors (Pvt.) Ltd, the sole agent for the Mahindra brand of commercial and passenger range of vehicles, holds its place as Ideal Group’s flagship company. The group also diversified its operations over numerous areas such as finance, renewable energy, logistics, vehicle fleet rental, transportation, power generators, tyres, tools, automotive spares and specialist automotive multi-brand aftersales services, which has contributed to generate over Rs.20 billion in turnover. (NF)