TMEIC to Invest ¥8B Worldwide for Global Business Expansion
Investing Nearly 4 Billion Yen in India Including for Construction of a New Factory Toshiba Mitsubishi-Electric Industrial Systems Corporation (hereinafter, “TMEIC”; President & CEO Kiyotaka Machida) will invest approximately 8 billion yen for its overseas subsidiaries. The investments are being made starting from March to September 2016 as a means of accelerating global business of TMEIC’s PV inverters for large-capacity solar power generation systems, which capture the world’s top market share. Capital reinforcement will be made for its subsidiaries located in nearly all regions throughout the world in India, the United States, China, Southeast Asia and Europe.
The PV market, which also has been strong in Japan, is growing rapidly worldwide corresponding to a reduction in construction costs of power plants in addition to promotion of the use of renewable energy. Although North America, China and India are currently the three major markets, the PV market is expected to expand in other regions as well such as Southeast Asia, Latin America, the Middle East and Africa in the future. While TMEIC’s PV inverter business currently generates approximately 60 billion yen (with nearly 40% comprising overseas business), the Company aims to expand this amount to approximately 100 billion yen (with nearly 60% comprising overseas business) by fiscal 2017. The capital increase at this time will be made in order to firmly maintain the top position in the industry. TMEIC will quickly expand its production capacity of PV inverters at overseas bases from the current annual capacity that is slightly under 2GW to 7GW by 2017.
In terms of the breakdown of investment, capital of approximately 4.5 billion yen will be made to augment the financial base and working capital for expanding business at TMEIC’s overseas subsidiaries in which the scale of business is expected to expand rapidly. The remaining 3.5 billion yen will be allocated toward reinforcing production capacity at overseas manufacturing bases that are already operating in China, the United States and India.
Nearly 50% of the overall amount invested at this time, which is equivalent to 4 billion yen, will be used for business operations in India, in which 2.5 billion will be allocated for construction of a new factory. While the local production of PV inverters is currently underway at TMEIC’s factory in Bengaluru in India, which was acquired from Europe-based AEG Power Solutions BV in August 2014, the factory is continuously operating at full capacity due to a rapid increase in orders within India after the acquisition. Accordingly, the decision was made to construct a new factory possessing a production capacity that is nearly three times larger than the current factory in order to utilize the new facility as a production base directed toward further expansion of TMEIC’s inroads into the Indian market as well as other markets outside India.
The new factory in India will be built in Bengaluru where the current factory is also located and will be constructed on land situated adjacent to TMEIC’s operating motor factory. The concept of the new facility encompassing a land area of 27,000m2 and building area of 10,000m2 is to be a next-generation “energy recycling-based sustainable factory” equipped with a solar power generation system and an energy storage system (ESS). Together with relocation from the current factory, TMEIC expects to employ approximately 250 people at this production site. Construction will start from this spring with the aim of commencing operations from summer 2017.
In addition to PV inverters, the new factory in India plans to realize local production of motor drive inverters, which will be combined with motors manufactured at the factory located next to the new factory, and Uninterruptible Power Supplies (UPS), for which sales of UPS made in Japan are already being conducted in India.
