PSA Peugeot Citroen seals second coming with R4,000-cr TN plant

Written by Sajan C Kumar | Chennai | Updated: Jun 30 2011, 06:13am hrs
Over a decade after its farewell to India, Frances largest car-maker PSA Peugeot Citroen is back with a bang, committing R4,000 crore to build a factory that will manufacture 3 lakh cars a year. The plant, which will generate a total of 20,000 jobs, will come up at Sriperumbudur near Chennai in Tamil Nadu and cater to both Indian and export markets.

Peugeot, which left India after an acrimonious divorce with joint venture partner Premier Auto in the late 1990s, is driving solo this time: The Indian operation will be a 100% subsidiary of the French parent.

The company will be the second French carmaker to set up shop in India, after Renault-Nissan. With its choice of Tamil Nadu, PSA Peugeot Citroen joins other global carmakers like Hyundai, BMW, Ford and Renault-Nissan which have built factories in the southern state.

On Wednesday, a PSA Peugeot Citroen team met chief minister J Jayalalithaa to discuss setting up an integrated automobile project. The delegation included Gregoire Olivier, CEO of Asian operations for PSA Peugeot Citroen, China, Frederic Fabre, managing director of PSA Peugeot Citroen India project, Jitesh Gadhia, senior managing director, Blackstone, Sanju Saha, vice-president, HR, and Shashikant Vaidyanathan, engagement manager, PSAs India project. The state industries minister, chief secretary, principal secretary (industries) and the chief of the State Industries Promotion Corporation were among those who represented the government.

PSA Peugeot Citroen evaluated sites in Andhra Pradesh and Gujarat before deciding on Tamil Nadu, possibly attracted by its strong component manufacturing base and port logistics.

The French carmaker, currently ranked the sixth largest in the world, has two car brands, Peugeot and Citroen. During its earlier stint in India, it had launched the Peugeot 309. In 2010, PSA had a turnover of $67.30 billion (R3,09,556 crore) and is ranked 94 among Fortune 500 companies. Currently, 39% of the company's sales are from non-European countries.

The company plans to raise it to 50% by 2015. A press release issued by the government claimed that Chennai offers a mature automobile ecosystem with components supply base, abundant availability of skilled manpower and port logistics.

PSA has sought a package from the chief minister, including land.

At the meeting, the chief minister thanked PSA for selecting the state and assured government support for quick implementation of the project. The project is expected to provide direct employment to about 5,000 and indirect employment to another 15,000. The PSA project will help attract a large number of French component manufacturers, triggering a multiplier benefit to the state economy, the release added.