"Our R&D people are working on developing a CNG vehicle which will have factory fitted kits. We are going ahead with the development but lot will depend on availability of the fuel across the country," Maruti Suzuki Chairman R C Bhargava told reporters here.
He said the company may come up with the CNG car during 2010-11.
"We hope that we will see one or two models in next fiscal," Bhargava said, without elaborating further.
MSI is focusing on the small car segment as part of the project.
"We are concentrating on small car segment... up to B segment. The small car customers are much more price sensitive. So we want to make affordable car for middle class and lower middle class families," he said.
MSI has produced a total of 1.2 million units during the 2009-10 fiscal.
The company today started receiving natural gas at its Manesar plant from state-run Gas Authority of India Ltd (GAIL). As per the agreement with MSI, GAIL will supply 0.33 MMSCMD of R-LNG at the rate of USD 5.8 per mmBtu under a 10-year contract.
MSI is the first customer of GAIL's newly commissioned Chainsa-Jhajjar-Hissar pipeline which has been constructed at an investment of Rs 450 crore.
Commenting on the deal with GAIL, Bhargava said: "Production cost will come down by 0.4 per cent per vehicle as the cost of power generation by gas is half than that from diesel."
He, however, clarified that there is no chance of the benefit of the cut being passed on to consumers.
"No, it will not happen. Earlier we were producing at higher cost by absorbing the higher production cost of power generation by diesel. The gas supplied by GAIL will be mainly be used for paint shop and power plant," Bhargava said.
The captive power generation at MSI's Manesar plant is 68.5 megawatt.