Skoda (A dvn of Volkswagen) unit in Aurangabad to manufacture Octavia
Deepak Joshi/HT correspondent (New Delhi, November 4)
CZECH AUTOMOBILE giant, Skoda, plans to manufacture its Octavia model at a greenfield site in Aurangabad with an initial indigenisation of 25%. The project will be implemented through a wholly-owned subsidiary - Skoda Auto India Pvt Ltd. The company plans to dilute its stake by 8 per cent to 10% over the next 2 to four years.
The car will be in a wide range of engines ranging from 1.6 litre to 2 litre, both in petrol and diesel versions. The car will have an initial indigenisation level of 25%.
The company plans to sign a memorandum of understanding with the director-general of foreign trade (DGFT). Skoda hopes to achieve the indigenisation level of 70% within five years. The automobile major has assured the government that it will achieve exports to the tune of Rs 1,785 crore ($397 million) within the first six years of commencing production. It is confident of starting exports from the third year.
Skoda, a subsidiary of the Volkswagen group, will be investing US $10 million in the first year of production and raise it to US $56 million over three years. The company has assured the government that it will invest US $16 million in the second year of setting up shop here and another US $30 million in the third year.
The Czech automobile major hopes to sell 45,000 cars in the first five years of full production. The company is confident of selling 6,000 cars in the first full year of manufacturing and gradually raise the capacity to 10,000 units per annum within three years. Referring to the slump in premium segment cars, Skoda states in its application approved by the Foreign Investment Promotion Board (FIPB), "In view of the current stagnancy of the passenger car markets in India, Skoda has planned to implement the project in a slow start-fast growth mode, especially to tune with the market realities and the growth calibration being adjusted to market expansion. This will ensure that no significant idle capacities are generated in the country."
On the technological fee, Skoda has suggested a payment of US $1,000 per unit. It has contended that this is reasonable for a high-tech Euro-II compliant car (US $45 million). The fee will be paid in five installments spread over a period of two to three years. Later on after the induction of domestic capital, royalty payment on the basis of 6% of the cost of manufacture has been suggested . In case of exports the royalty payment proposed is 8% of production. |
