Aspocomp bets big on $100 mn Chennai plant

Finland-based manufacturer of printed circuit boards Aspocomp said it was investing $100 million to set up a new high density interconnections PCB manufacturing plant. The plant, first in the country, will be based in Sriperumbudur. Aspocomp also supplies components to Nokia.

Aspocomp also said it would pump in another $100 million in India in the second phase, provided everything progressed according its plans and projections. The Sriperumbudur PCB plant is expected the largest Aspocomp facility globally.

Aspocomp's manufacturing unit will come up on a 15 acre area within the Nokia Telecom Special Economic Zone in Sriperumbudur where global firms like Nokia, Motorola, Flextronics and Foxcon will have their facilities.

The company has planned an investment of about $100 million over the next couple of years. Of the $100 million, 80 per cent of the investment would go for building machinery and 20 per cent for working capital and start-up cost. The project will be funded with long-term loans raised by the parent company and the Indian subsidiary.

The foundation for the plant was laid on Wednesday. The plant is expected to be operational in the second half of 2007 and go full stream in 2008. The plant will have a capacity to build 50 million HDI PCBs in the initial period and the company sees potential to scale it up to over 100 million HDI PCBs by 2011.

The plant will provide employment to 1,500 people initially and the total employment is expected to go 2,700 working on rotating 3 shifts in the future.  Addressing a press conference, Maija-Liisa Friman, president and chief executive officer, Aspocomp Group Oyj, said the reason for investing in Chennai was to meet the capacity needs of its customers like Nokia, which is a market leader in India and wants to support local customers with close proximity via local manufacturing.

The expansion in India was a logical step in the implementation of its new global strategy, she said, adding that India was a fast growing market for PCBs.

Friman also said the company also saw future potential on emerging mega market in India with all key players coming to India with manufacturing facilities.

However, she said Indian operations would be cost-competitive only if the country had developed suppliers of raw material and equipment to its manufacturing needs. Aspocomp initially will be importing its raw material and other equipment.

Quality suppliers base is crucial to make Indian operations more competitive than other plants, she added. The Chennai plant will initially cater to its customers like Nokia in the domestic market as the demand in India was building up, said Rami Raulas, senior vice president, Aspocomp.

The major challenge for the company in Chennai operations will be in the area of waste disposal and 'zero discharge' environment guidelines. The company is discussion with state government for its support. In its other production locations, Aspocomp had firms to handle the waste and recycle the same.

The Euro 154 million Aspocomp also sees opportunities to server market like South East Asia, West Asia and also Europe from Chennai unit in the future when it is likely to produce PCBs for digital cameras and MP3 players.

Aspocomp is also planning to put up its product research and development facility in Chennai.