Clutch-maker Setco plans Rs 300 cr investment to up capacity

Sheth also expects to close FY19 with over 20 percent growth, which will be better than the industry average. Baroda: Setco Automotive, the third largest clutch manufacturer for the commercial vehicles, plans to invest Rs 300 crore over the next three years to ramp up capacity and other activities, chairman Harish Sheth has said.

The Mumbai-based auto components-maker, which claims to enjoy 85 percent market share in the domestic MHCV (medium heavy vehicles) clutch segment, also expects to grow at about 20 percent in FY20, he said.

With four manufacturing facilities at Kalol in Baroda and Sitarganj in Uttarakhand and one each in the US and Britain, Setco lists Tata Motors, Ashok Leyland, Bharat Benz, Mahindra & Mahindra and Volvo-Eicher as major clients supplying clutch discs and clutch covers.

Besides, the company has two R&D centres in Baroda and Britain besides a foundry in Baroda.

“Over the next three years, we will be investing over Rs 300 crore to rap up capacity and in other activities,” Sheth told during a plant visit to Kalol over the weekend.

Of this, Rs 120 crore will be invested in the foundry subsidiary LavaCast, and Rs 150-160 crore will be invested in other activities, including capacity expansion, setting up of a heat treatment and press shop, among others, chief executive JS Gujral said.

“This investment is for over three years starting with Rs 50-60 crore in FY20 and then scaling it up in the subsequent years,” he added.

On the market outlook, Sheth said the first quarter of FY’20 will be muted “but we expect good pick up from the second quarter ahead of the BS-VI introduction from next April which will push up vehicle prices. So, we expect higher demand this fiscal year.”

Sheth also expects to close FY19 with over 20 percent growth, which will be better than the industry average.

He said the higher growth of auto industry in the past few years would lead to better growth for him in the replacement market as these vehicles come of out the three- year warranty period. “This will lead to demand for clutches in a bigger way. So we expect good growth in the next seven to eight years for the after-market.”

The company had reported around Rs 8 crore net income on a revenue of Rs 160 crore in the December 2018 quarter.

Recently, the company also made foray into the farm equipment sector with clutches for tractors.