Japanese trader Sumitomo taps India for industrial park operation

09, May. 2019

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CHENNAI, NNA - Major Japanese trading house Sumitomo Corp. is extending its arm to India in its industrial park operation business following its expansion in the field in Southeast Asia.

The company recently opened a 260-hectare industrial park, Origins by Mahindra World City, North Chennai, near the capital of the southern state of Tamil Nadu, in partnership with Indian conglomerate Mahindra & Mahindra Ltd. group.

Mahindra Industrial Park Chennai Ltd., the operator of the park, has signed a contract with Japanese industrial machinery maker Yanmar Co. and cable and electrical parts manufacturer Nissei Electric Co. for tenancy, according to Sumitomo.

The operator is a joint venture in which the Japanese trader owns a 40 percent stake and Mahindra World City Developers Ltd., a real estate business arm of the Indian group, holds 60 percent, Sumitomo said in a statement.

The joint unit has initially developed about 107 hectares of the industrial park with a 7.5 billion yen ($68 million) investment and plans to develop additional 150 hectares as the second phase.

For the first phase, Sumitomo expects to draw 20 to 30 Japanese tenants. The minimum land sales unit is 5,000 square meters to attract small and midsize firms. The operator is also considering offering rental factories.

Sumitomo has teamed up with Mahindra as the Indian firm has already run an industrial park in Chennai and was considering expanding its operation, Tsutomu Akimoto, Sumitomo's managing executive officer and general manager of the Infrastructure Business Unit, said at an inauguration event on April 26 in the park about 37 kilometers north of Chennai.

The estate is the first industrial park to sign a memorandum of understanding on power outage prevention measure with the state government of Tamil Nadu and it also sources underground water inside the park for stable supply to tenants, according to Sumitomo.

Chennai is southern India's gateway for Southeast Asia, and Japanese companies aim to make their Indian operations compatible with those in Southeast Asia particularly at an early stage, Akimoto said.

Nissei Electric will invest $14 million to build a plant in the park to begin operation in May 2020 and transfer part of production from its factories in Vietnam, said Hidehiko Kirino, the company's executive director.

The Chennai plant will ship printer parts and tubes to Japan for the time being while exploring business opportunities in India, he added.

Sumitomo operates a total of six industrial parks in Indonesia, Myanmar, the Philippines and Vietnam. It also plans to develop one in Bangladesh. (NNA/Kyodo)