MUL-Suzuki scale up India investment plans by Rs 3000 cr

NEW DELHI: Bullish on the Indian market, Suzuki and Maruti scaled up their investment plans for the country by Rs 3,000 crore, taking the total to Rs 9,000 crore, and announced they would start contract manufacturing for Nissan from 2008-09.

Suzuki Chief Osamu Suzuki, on a visit to India, said that the companies would not only expand operations and production in the domestic market but gradually use it as a base for exports to other regions, primarily Europe.

"Around 90 per cent of the new investments would be met through internal accruals while we may have to take loans for the remaining portion," Suzuki told reporters, a day after he along with senior Nissan executives met Government officials to seek their support and better infrastructure facilities.

Elaborating on the plans, he said Maruti's new car plant at Manesar, which is expected to begin production soon, will manufacture 1,00,000 units of the 'Swift' as well as 2,00,000 units of a new "small car" that the company is developing in collaboration with Nissan.

"Out of the production of the new small car, we will export 1,00,000 units ourselves while 50,000 would be exported by Nissan and the remaining 50,000 units sold in the domestic market by us," he said, adding that the plant will see overall investments of Rs 2,500 crore. 

Suzuki said the company was also in talks with Nissan for a new 2,50,000-unit plant, location for which is yet to be decided. The investments for this would be around Rs 2,500 crore, though he refused to specify whether Nissan would join in as equity partner or come just for vehicle sourcing.

"No final agreement has been reached on this," he said, when asked whether it will be a joint investment project or just a contract manufacturing deal by Suzuki.

Share price of Maruti closed the day at Rs 913.05, up 2.2 per cent at the Bombay Stock Exchange on a day when the sensex tumbled by 79 points.

Suzuki said Maruti-Suzuki was also increasing investments in its diesel engine manufacturing plant to Rs 2,500 crore. The plant, in which Suzuki has a 70 per cent stake, would begin production from December and will start with an initial annual capacity of 1,00,000 units, which will be scaled up to 3,00,000 units later.

The produce from the diesel plant would be equally divided between both domestic and export markets.

Suzuki said apart from the above investments, Rs 4,000 crore was being put in the company's existing manufacturing location at Gurgaon as part of ongoing expansion programmes.

He said against the total 5.62 lakh units Maruti sold in 2005-06 (including exports), the sales this year were expected to be 6.3 lakh units this fiscal.