L&T and Kobe Steel in Rs 60 crore JV for tyre equipment

Larsen & Toubro and Kobe Steel will make rubber processing machinery in India. The two companies will collectively invest about Rs 60 crore in L&T Kobelco Machinery Pvt. Ltd, with L&T owning a 51% stake with the rest owned by Kobe. The company will make internal mixers and twin screw rollerhead extruders used in tyre production.

The JV will set up a production facility and related infrastructure. Construction on the plant is expected to start in February and operations to start in October 2011. Kobe makes tyre machinery in three countries, Japan, China and USA, making this its fourth location.

Kobe has been in the mixing room equipment for tyres and enjoys market leadership for internal mixers. L&T has market leadership in tyre curing presses and tyre building machines. Thus, the two companies have complementary strengths in the market.

Kobe and L&T have an existing technological tie-up, under which L&T got access to knowhow to make tyre curing presses. The new JV will make use of L&T’s marketing network to sell these products in India, Europe, Middle East, Africa, Russia and Eastern Europe, countries where Kobe’s sales have been relatively low. Kobe said in a statement that it expects annual sales from this JV to be about $45 million or about Rs 200 crore in 2014-15.

Read the press release from L&T and read the statement from Kobe Steel here.

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