Pune-based Force Motors today inked a pact with Rolls-Royce Power Systems to set up a joint venture facility at Chakan to produce the MTU series of engines at an initial investment of over Rs 300 crore and may generate Rs 1,000 crore in revenues on reaching full capacity.
Besides engines, the 51:49 JV, Force MTU Power Systems, will also build Series 1,600 generators for the Indian and global markets.
At present, these multi-application engines are being produced at Rolls-Royce Power Systems’ manufacturing facility in Germany. Following the tie-up, the facility will be moved to the Pune facility.
The proposed facility is expected to commence production from the end of 2019, Force Motors managing director Prasan Firodia said during the media briefing to announce the partnership.
“The MTU series 1600 engines will now be produced in India for the global markets. And India will be the sole source for this engine going forward. The two partners together will invest in excess of Rs 300 crore in the first phase of the project,” Firodia said. The JV is looking at a potential revenue of Rs 1,000 crore per annum over the next few years, he added.
Under the JV, while engines will continue to be branded as MTU, while the generator sets built and supplied by the Pune facility to customers in India, Nepal and Sri Lanka will carry the 'Force-MTU' brand. However, in other global markets these generators will be sold under the name of 'MTU Onsite Energy'.
Force Motors is mainly into commercial, utility and agricultural vehicles. MTU, on the other hand, is one of the leading manufacturers of large diesel engines, propulsion and drive systems for heavy applications such as rail, land, and defence vehicles along with marine applications.
"This is the initial investment required to transfer production of series 1600 engine to India, also to do some additional engineering facility, in extending the power range of the engine besides in setting up the building and other infrastructure as well any production that will be required, among others," Rolls-Royce Power Systems president and chief executive Andreas Schell said.
MTU launched the 1600 engine family in 2009 and has over 20,000 units in service currently, Schell said.
The current facility in Germany produces 2,000 units per annum at present, he added.
"We are looking at a potential (revenue) of close to Rs 1,000 crore per year for this JV over the next few years to begin with. The key objective of this tie-up is increased localisation to make it more cost competitive and increase market penetration globally," Firodia said.
By having more and more local content, the objective is to improve the price point for both global and domestic, he said, adding, "we will have to be competitively priced if we want to exist and play in the market."
Stating that the engines can be used for multiple applications, including for Railways across the globe, Schell said the JV will explore opportunities into other segments as well, going forward.