New Delhi: The Welspun Group has started work on a pipe manufacturing facility in the US at an investment of $100 million that will result in substantial cost savings for its products in the American market.
At present, the company is selling pipes in the US from India but the facility in Little Rock Arkansas would bring it closer to customers and result in savings of $100 per tonne of transportation cost.
The saving is substantial when compared to the cost of pipes, which range between $1,300-1,500 a tonne.
“The overall savings from locating close to customers would be $70 if other costs are deducted. As the capacity of the unit would be 300,000, the overall savings would in excess of $20 million a year,” Akhil Jindal, president, Welspun Group told PTI.
The project is being implemented by the Group company Welspun Gujarat Stahl Rohren Ltd.
He said the facility would start production by spring 2008 and would contribute $300 million to the company’s topline, which is expected to touch $1 billion in 2007-08.
The company decides to locate its unit in the US as the country is becoming a hub for pipeline industry and has a strong replacement market. “It will also bring us closer to our customers in Canada and Latin America,” Jindal said.
Welspun also got incentives to locate in Little Rock, which is home town of Former US President Bill Clinton.
The US plant, Welspun’s first outside India, will come up on a 740 acre site and will employ 300 people. The company has plants in Dahej and Anjar in Gujarat.