Maruti Suzuki to commence work on Gujarat plant by end of 2014

Maruti Suzuki will start work on its Gujarat plant by the end of 2014.

Maruti Suzuki to commence work on Gujarat plant by end of 2014

Maruti Suzuki will start work on its Gujarat plant by the end of 2014. This was indicated by Maruti Suzuki India (MSIL) chairman RC Bhargava, who called upon Gujarat chief minister Anandi Patel on Friday along with Osamu Suzuki, chairman, Suzuki Motor Corporation (SMC).

During PM Narendra Modi?s recent visit to Japan, Suzuki had said it will complete the facility by 2017, which will take the company?s annual manufacturing capacity to 3 million units from the current 1.5 million.

?Some work has already been started on the site and we are waiting for minority shareholders’ approvals,? said Bhargava. According to sources, Bhargava and Suzuki also visited the site of the plant and took a tractor tour to see the progress.

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MSIL is in the process of getting minority shareholders’ nod to let its parent company, SMC, own and invest in the Gujarat facility. Bowing to pressure from institutional investors, MSIL had decided to seek minority shareholders’ approval after tweaking some of the earlier proposals for the Gujarat plant.

As per the revised plan for the project, SMC, through its wholly-owned subsidiary, would make the investment through depreciation and the equity brought in by the parent without a mark-up on the cost of production. In case of termination of the contract manufacturing agreement between them, the facilities of the Gujarat subsidiary would be transferred to MSIL at book value and not at fair value as was envisaged before.

Earlier in June, top Maruti Suzuki officials had met Gujarat CM Anandi Patel, state finance minister Saurabh Patel and other government officials for clarity on two- company model for the state support agreement, which MSIL had signed in 2011 for establishing a manufacturing facility in Mehsana district.

In January this year, it was decided that the facility would be a Suzuki unit that would make vehicles exclusively for Maruti. Accordingly, the SSA would require to be rectified.

In 2012, MSIL had acquired 640 acres of land near Becharaji and a further 550 acres in Vithlapur, where phase One of construction is expected to start in 2017. A state support agreement (SSA) had been signed between the company and the state for purchase of land as well as setting up of the manufacturing facility. Suzuki, which owns 56% in MSIL, will be the executive arm whereas Maruti will focus on the marketing part of the deal. This will be Suzuki’s first wholly-owned manufacturing facility that will exclusively make vehicles for Maruti.

The Gujarat government?s major concern was whether this investment fell under foreign direct investment, in which case it will be a violation of the agreement entered into in 2012 ? a different set of rules will be applicable to foreign investment.

Earlier, the Gujarat government had proposed Mandal-Becharaji Special Investment Region (MBSIR), which was envisaged as an auto-industry hub, consisting of 44 villages. following farmers’ protests, who demanded withdrawal of MBSIR, 36 of those villages were excluded from the SIR.

Ford gears up to start Sanand unit by early 2015

Chennai: Ford India on Friday said it was gearing up for start of operations at its $1-billion Sanand plant in Gujarat by early 2015. The plant will focus on small cars (mass segment), the company said. ?Work on Gujarat (Sanand) plant is on track and the first proto-type of a new car will be ready by 2014-end,? said Nigel Harris, president, Ford India. ?The new plant will focus on small cars segment initially, which holds nearly 75% of total market share. We see great opportunities going forward.? On whether the Sanand plant will produce the Ka hatchback, which was just launched in Brazil, he said: ?Of course, the Ka is among the small cars being looked at for launch from Sanand plant. We will announce details at an appropriate time.?

R Ravichandran

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First published on: 06-09-2014 at 00:59 IST