Hitachi confirms Telcon intentions

Hitachi has confirmed it will take a further 20% stake in Telcon, converting its Indian joint venture with Tata Motors to a subsidiary. It will spend INR 11.6 billion (US$ 261 million) to up its stake from 40% to 60%.

A statement from Hitachi said it, "Decided to acquire 20% more shares of Telcon to make Telcon into a subsidiary and to take a strong lead in India, where the market is expected to grow significantly."

Hitachi said that by acquiring Telcon it hoped to maintain its high share of the Indian excavator market at a time when competition is intensifying. It also expressed an interest in entering the Indian mining sector, with the sale of dump trucks.

In terms of the wider region, Hitachi said it planned to establish a wider supply base around Telcon, with a view to making it a global manufacturing hub. It also said it would use Telcon to develop products better suited to India and other emerging markets.

Telcon had sales of INR 21,2 billion (US$ 478 million) in the fiscal year ending in March 2009. This was a -22% decline on the record set in 2008, when revenues for the fiscal year hit INR 27,1 billion (US$ 611 million). The company made a net profit of INR 894 million (US$ 20 million) last year, a sharp fall from the high of INR 3.23 billion (US$ 73 million) set the previous year.

Telcon was established as a technical co-operation between Hitachi and Tata Motors in 1983, with Tata manufacturing Hitachi products under license in India. In 2000 Hitachi acquired a 20% stake in the business in 2000 and a further 20% in 2005.

Telcon has three factories in India, where it manufacturers Excavators, wheeled loaders and backhoe loaders. Hitachi says the company ahs about a 50% share in the Indian excavator market.