Calcutta, Jan. 11: Phoenix Yule Limited is conducting an internal study to assess the viability of setting up an additional plant in the country.

?We would like to venture into the southern part of the country to be near raw material sources and our clientele base,? managing director T. K. Mukherjee said.

The company is also weighing options between a greenfield project and an acquisition, he added. Phoenix Yule is a joint venture between Phoenix CBS of Germany and Andrew Yule and Co Ltd and is the largest manufacturer of conveyor belts in South Asia.

The German major holds a 74 per cent stake in Phoenix Yule, while Andrew Yule holds the remaining 26 per cent. The company?s existing plant is at Kalyani in Bengal.

?Although it would be more economical for us to increase capacity at our existing plant, we are weighing other states because of various infrastructure and labour problems,? Mukherjee said.

The company has not yet decided on the project and is conducting an internal study. However, Mukherjee said they will complete the study within six months and will decide by 2005-end. Currently, it has a production capacity of 400 kms textile belts and 100 kms steel cord belts. ?The decision will be based on various factors, such as business growth, margin and labour productivity,? added Mukherjee.

The company has also successfully completed a project on manufacture of energy optimiser belt in association with Indian Institute of Technology, Kharagpur.

The company has a market share of around 50 per cent in the conveyor belt industry and is a major exporter of the product. It has a market share of 24 per cent in textile belts, 70 per cent in steel cord ones and 85 per cent in pipe conveyor belts. Mukherjee said while the domestic conveyor belts industry is growing at around 3 per cent, the company has achieved a growth rate of 7 per cent in fiscal 2004 and expects to maintain a similar growth rate this fiscal.

Phoenix CBS will consider acquiring the 26 per cent stake held by Andrew Yule when the German major receives the first right of refusal from the latter offering its stake, said Mukherjee.

Andrew Yule had decided to divest its 26 per cent stake in the company about two years back. However, since Andrew Yule is now under the purview of the Board for Industrial and Financial Reconstruction, the divestment and rehabilitation package will be decided by the board.