India's RPG Group Plans $2.25 Billion Expansion in Carbon Black, Power and Tire Sectors

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Researched by Industrial Info Resources (Sugar Land, Texas)--RPG Enterprises (Mumbai), one of India's largest industrial conglomerates, plans to invest $2.25 billion in its subsidiaries in the carbon black, power and tire industries in a major expansion drive in the next couple of years. The company has earmarked $1.5 billion in investments in the Calcutta Electric Supply Company. The group will also invest $500 million in CEAT Tyres and $250 million in Phillips Carbon Black Limited.

Investments made in Calcutta Electric will be used to increase its production capacity to address the power requirements of states in West Bengal, Orissa and Jharkhand. Calcutta Electric operates four power stations with a total generating capacity of 975 megawatts (MW) that generate and distribute power to Calcutta and West Bengal, catering to more than 14 million customers. Projects are under way to increase the company's power-generating capacity by 4,150 MW by 2012. Calcutta Electric has commenced work on its 250 MW Budge Budge expansion project, which is likely to be commissioned by September 2009. An upcoming 1,900 MW power plant at Haldia, West Bengal, is slated to be commissioned by 2011. Calcutta Electric has also signed a memorandum of understanding with the state government of Jharkhand to set up a 2,000 MW power facility in the state.

Phillips Carbon is the world's sixth-largest manufacturer of carbon black and is also Asia's largest exporter of the product. The company's three manufacturing plants constitute 70% of India's installed manufacturing capacity of carbon black. The company plans to expand its capacity from 270,000 tons to 390,000 tons and will also set up a plant with a capacity of 50,000 tons in Vietnam. Phillips Carbon will also expand its capacity for waste-heat-based power generation from 28 MW to 53 MW over the next three years, resulting in surplus sales of 45 MW. The company has a technical collaboration with Columbian Chemicals Company (Marietta, Georgia) and is the only Indian manufacturer of carbon black to be accredited with the ISO 9001 certification.

CEAT Tyres, India's fourth-largest tire manufacturer by revenue, will set up two additional manufacturing plants: one for radial tires and the other for manufacturing specialty tires and off-the-road tires. CEAT is likely to choose among Gujarat, Karnataka and Tamil Nadu for setting up its radial-tire-manufacturing facility while the specialty tire plant is likely to come up at Ambernath near Mumbai, Maharashtra. This expansion initiative will increase the company's production capacity from 550 million tons per day to 750 million tons per day. CEAT is in talks with international players for sourcing technology to be used in the manufacture of radial tires. In addition to increasing manufacturing capacity, CEAT Tyres will also strengthen research and development initiatives, undertake market expansion and improve customer interface. Funds will be raised through the sale of land, debt collection and internal accruals.

RPG's investments are guided by the group's strategy to remain competitive in the face of the privatization, liberalization and globalization policies of the government, which have opened up the Indian market to international majors. The group aims to increase productivity and enhance product quality and make more facilities available to its employees through its expansion initiatives. RPG is a $3.5 billion enterprise with more than 20 companies in its fold and interests in key sectors, such as entertainment, power, retail, technology, transmission and tires.

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