A technical tie-up with Frenzelit Werke Gmbh of Germany for making head gaskets and floatation of a 60:40 joint venture company in tandem with Royal Industries of Japan to produce two-wheeler gasket, from the core of the company's game plan to beef up service in the domestic market and expand international presence. According to Mr.Unnithan Chairman and Managing Director Sankar Sealing Systems the tie-up with Frenzelit will help his company supply head gaskets for engines in new generation vehicles.The company already sounded out commercial vehicle maker Ashok Leyland for supplying head gaskets for Hino engines. Infact, Ashok leyland is proposing to move towards a single Hino engine platform, Telco is also reported to have been favorably disposed towards getting head gasket from Sankar for engines in Indica cars.

The $50 million Frenzelit,a 121-year-old privately-owned company,is the pioneer in development of non-asbestos gasket material. The tie up with Sankar provides for no royalty payment. Yet, Frenzelit hopes the alliance will help it sell gasket material to sankar and enable it expand market reach. If the arrangement works well ,a jointly initiative for making non-asbestos gasket material in India is within the realm of possibility ,sources say.

The joint venture with Royal Industries, will facilitate the relocation of existing Japanese plant in Chennai.The Japanese company has chosen to relocate two-wheeler gasket plant so as to achieve production economies. The 60:40 joint outfit is being registered as an export oriented unit. The entire production from this venture will go to service the needs of Royal globally. Relocation will fetch a 30 percent cost reduction for Royal.

The tie-up with Frenzelit would enable it to design and develop new-generation gaskets including non asbestos ones for the automobile sector.

Sankar Sealing is on the look out for a location to relocate Royal Industries plant in Thirumazhisai Industrial area. The company would invest Rs 1crore towards land and infrastructure.

While the venture will be 100 percent export-oriented unit some output would be sold locally. The Japanese company is committed to an offtake of 80 percent. Relocation of machinery is expected to commence by end-2002.

With OEs insisting on continous cost reductions, Royal Industries had decided to relocate the unit outside the Japan as that that would bring about a 30 percent price reduction.