Export from Maruti's proposed Gujarat plant to save logistic cost

India's largest car manufacturer Maruti Suzuki plans to export a large share of production from its proposed Gujarat plant as according to the company estimate the proximity of Mundra port will save as much as Rs 4,000 per car on logistics cost.

“The Gujarat factory will focus on export. The proximity of Madura port will help us to save about Rs 4,000 per car. This will be huge boost for our export business,” M M Singh, Maruti's Managing Executive Officer for Production told Business Standard on the sideline of the launch of its utility vehicle Ertiga here.

According to singh, since export will be the “main objective”, all models which have high demand from overseas are likely to be produced in Gujarat factory.

“The company exports more or less all of its models. There are certain models which has high demands. It will depend on the overseas demand what will be produced in the plant. The capacity will not be an issue as we have 1200 acres for the plant,” he said.

This means Maruti's export-oriented model, the A-Star, which accounts for 25 per cent of company's overseas sales, along with comapct cars like Alto, Zen which has high demand overseas are likely to be manufactured in the plant.

Maruti Suzuki markets the A-Star as the Alto in Europe, while in other regions, it is sold as Celerio. Also Japanese car-maker Nissan sells the A-Star in Europe as Pixo under a contract manufacturing agreement with Maruti's parent company, Suzuki.

However, in 2011-12 company's exports stood at 1,27,379 units - a decline of 7.9 per cent from the previous fiscal. The company's export markets include Europe, Latin America, Middle East and South East Asian countries. Meanwhile, the car-maker is likely to sign the formal agreement for procurement of land for its greenfield manufacturing facility at Mehsana in Gujarat in June, 2012.

“Gujarat government will hand over 600 acres of land to Maruti following the agreement. The balance 600 acres will be privately acuired by us. The process is on. We are expecting to get hold of the land by June,” Singh said.

It will also develop a vendor park in the plant area.The construction work in the plant is likely to begin by next year and the company is confident of meeting 2016 deadline to make the plant operative.