Gujarat could be bigger home for Maruti by 2020

Dec 27 2012, 11:04 IST
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Haryana may be Maruti Suzuki’s first home, but Gujarat could become its main production base. (Reuters) Haryana may be Maruti Suzuki’s first home, but Gujarat could become its main production base. (Reuters)
SummaryHaryana may be Maruti Suzuki’s first home, but Gujarat could become its main production base.

Haryana may be Maruti Suzuki’s first home, but Gujarat could become its main production base some eight years down the line. By then, its new facility in the state would have surpassed the older ones in terms of investments as well as volumes.

Once the facility gets fully commissioned by 2020, total investments made by the company in Gujarat would be around R20,000 crore, including around R6,000 crore invested by vendors. This would be higher than R16,000 crore invested by them in two plants in Haryana — Gurgaon and Manesar.

By 2020, production capacity at the Gujarat facility would hit 15 lakh units annually compared with the combined capacity of Gurgaon and Manesar plants at 12.5 lakh units.

There will be two plants in Gujarat. The first site of 640 acres has already been acquired from the state government for about R150 crore, while negotiations are on to acquire another 600-700 acres for the second site some 30 km away. The first plant, with an annual capacity of 2.5 lakh units, should be up and running by 2015-16.

“In Haryana, each production line cost us about R1,200 crore. In Gujarat, investment in each line would be about R2,000 crore and there would be a total of six. There is a little bit left in terms of acquiring land at the second site. The layout is almost finalised, so ground-breaking should happen in early-2013,” Maruti Suzuki chairman RC Bhargava told FE.

Maruti’s parent firm Suzuki Motor is planning to shift production of its small cars to this centre later, as part of its effort to make India its export hub. Apart from being an investor-friendly destination with good infrastructure, Gujarat has several public and privately-operated ports. Maruti already uses the Mundra port for its car exports.

In March, Maruti had subtly hinted that its hub would shift from Haryana to Gujarat when its officials had said that while Manesar will see addition of a third production line in September, 2013, capacity at the Gurgaon plant would be successively reduced as part of a de-congestion plan due to the heavy traffic in the area.

By around 2015-16, Gurgaon will make about 5 lakh cars a year, down from the present 7 lakh.

Analysts said Maruti could be favouring Gujarat due to recurring labour problems at its Manesar plant, which resulted in a revenue loss of Rs 6,000 crore. The violence at the Manesar facility on July 18 this year claimed the life of a senior HR official and injured 96 others, after which the company fired over 500 of its permanent employees. However, the company has vehemently denied any plans to significantly shift out of Haryana because of such reasons, often praising the police and state administration for swift handling of the issue.

FAST TRACK

* Ground-breaking in ’13; full capacity seen by 2020

* First plant with 2.5 lakh units to be on stream by ’16

* Investment by Maruti, vendors at R20,000 cr

* Capacity at 15 lakh units, more than in Haryana

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