Chinese construction major Liugong plans manufacturing unit in In

New Delhi — Leading Chinese construction and mining equipment maker Guangxi Liugong Machinery Company Ltd (LiuGong) is firming up plans to set up a subsidiary and a production unit in India to capitalise on the growing demand for its machinery.

In just four years after entering the Indian market, the company through its representative office in the country has managed to sell 250 units of construction machines, each priced around Rs.4.5 million ($96,000) after the 37 percent customs duty.

With growing orders in the pipeline, the company was planning to set up a wholly owned subsidiary in Mumbai by March 2007, said K. Paul Choudhury, LiuGong regional manager for Southeast Asia.

“From selling 20 (units of) construction machinery in the first year we have sold 150 machinery this year, making for a total of 250 machinery in just four years. We feel that setting up an assembly unit, followed by a manufacturing unit, would make us more cost competitive,” Choudhury told IANS.

LiuGong is among the leading Chinese companies participating in the India International Trade Fair (IITF), Asia’s largest trade expo here, this year under the umbrella of China’s Commerce Ministry to give a greater push to bilateral trade through introduction of high technology and quality products in the field of telecommunications, engineering, construction and consumer goods in India.

LiuGong has on display two five-tonne capacity construction and mining machines.

Listed in China, the $0.6 billion firm is rated among the leaders in its field. LiuGong already has a subsidiary in Australia and exports its machinery to several countries including the US.

The company has just dispatched 42 wheel loaders to the UN. The company is yet to get orders in India for its mining equipment, unlike the demand for construction machinery.

Happy at the growing market in India despite initial competition from US major Caterpillar and Swedish major Volvo, the company is planning to broaden its product portfolio.

“We are launching three more products in India – a bigger wheel loader of eight-tonne capacity and a smaller wheel loader of three-tonne capacity,” said Choudhury.

On the investment plans, the official revealed that the company had initially engaged Ernst & Young as consultants but did not find its report satisfying.

“Now, based on the estimates proposed by PricewaterhouseCoopers, we are planning $0.5 million investment in India to start with. After the launch of the Indian subsidiary it will take at least two years to get clearances to start assembly operations by 2009-10,” he said.

To support its growing market, the company has started a training programme and currently has around 100 engineers to provide support services to customers in India.