As sentiment takes a beating, firms like Maruti Suzuki put off investment plans

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Maruti Suzuki is the latest in list of firms that have put projects on the backburner. Maruti Suzuki is the latest in list of firms that have put projects on the backburner.
SummaryMaruti Suzuki is likely to miss target of commissioning its proposed Rs 4k cr plant in Gujarat.

With the continuing slide in business sentiment

, the list of companies choosing to put off projects is sharply on the rise. On Tuesday, Maruti Suzuki India Ltd (MSIL) — the country’s largest carmaker — said it is likely to miss the target of commissioning its proposed Rs 4,000 crore plant in Gujarat by at least a year due to the ongoing slowdown in the Indian automobile market.

Related: Indian rupee logs worst fall to all-time low of 66.30 against US dollar, closes at 66.24

The company had originally planned to commission the plant by 2015-16. “It is unlikely that we would be able to commission the Gujarat plant even by the end of FY’16. The slowdown in the auto sector is very acute,” MSIL chairman RC Bhargava told newpersons after the company’s 32nd Annual General Meeting (AGM) here. He said the company is trying to access the sales projections and would accordingly decide the commissioning schedule of the proposed Gujarat plant.

Tepid consumer demand, which has badly hit the auto segment, has also dented the investment plans of companies in sectors such as consumer durables. Home appliances maker Whirlpool of India had earlier this month said it was deferring its capacity expansion plans at its Pondicherry, Faridabad and Pune plants, which currently has a total capacity of 2.5 million units per annum of refrigerators and washing machines.

Earlier, in July, the Saroj Poddar-led Zuari Fertilizers and Chemicals announced that it had put off plans to set up a Rs 5,000-crore urea plant in Karnataka amid problems that it was facing with the acquisition of land. Zuari Fertilizers, part of Adventz Group, had planned to set up a 1.3-million-tonne-per-annum urea plant in Karnataka’s Belgaum district. The plant, proposed in 2010, was to be commissioned by 2015-16.

South Korean steel maker Posco had also announced it will pull out of a $5.3 billion steel mill development in Karnataka. The company, on July 16, said in a regulatory filing in Seoul that it had agreed to cancel the project with the government of Karnataka because of delays in receiving iron ore mining rights and opposition from residents which had held back land acquisition. Close on the heels of the Posco announcement, steel major ArcelorMittal too decided to drop its plan to set up a 12-million-tonne steel plant in Orissa. Citing inordinate delays in land acquisition and allocation of iron

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