Suzuki to set up new subsidiary for Gujarat plant, will produce cars for Maruti

Jan 28 2014, 20:53 IST
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The new company will manufacture vehicles only for Maruti Suzuki. Reuters The new company will manufacture vehicles only for Maruti Suzuki. Reuters
SummaryBoth Maruti and SMC will gain from this business model, says Bhargava.

volumes are manageable till this point after which you need a new company. Instead of SMC officials helping in expansion, I believe our Indian managers can do it best,” he said.

Headquartered at Ahmedabad, SMG will be set up by April this year with a starting share capital of Rs 100 crore. It will be headed by N Aizawa, a senior Suzuki executive who will be deputed from Japan, while other senior managers will likely be deputed from Maruti Suzuki itself.

Production at Gujarat is expected to start by end-2016, where SMG will initially invest Rs 3,000 crore for a 2.5 lakh unit per annum production line, though at start the output will be 1 lakh cars a year. In total, the two facilities in Gujarat – 640 acres in Becharaji and 550 acres in Vithalpur, can accommodate seven production lines producing almost 18 lakh cars a year. Till date, Maruti has already invested Rs 250 crore in purchasing the two plots of land, which will now be leased to SMG on an arms' length basis.

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