Fiat to invest Rs 2,341cr in Ranjangaon plant

3 lakh engines and 3 lakh units of other spare parts.

Fiat India Automobile (FIAPL), a 50:50 joint venture between Italy's Fiat group and Tata Motors, will make an additional investment of Rs 2,341 crore in the Ranjangaon plant near Pune to increase the production capacity. The companies have so far invested Rs 1,679 crore in the facility.

The additional amount will enable the plant to manufacture two lakh cars, three lakh engines and three lakh units of other spare parts, gearboxes and accessories.

The memorandum of understanding (MoU) to this effect was signed between Maharashtra Industry Secretary V K Jairath, on behalf of the state government, and FIAPL Chief Executive Officer Rajeev Kapoor.

In 2006, FIAPL announced an investment of Rs 1,679 crore for the existing capacity of one lakh cars and two lakh engines. The project is expected to reach the peak of its production capacity by 2012.

The new capacity will also be used to produce Fiat's next generation of cars, including Linea and Grande Punto, which will be launched within a year.

Though the facility will be jointly used for manufacturing cars and engines of both Tata Motors and Fiat, company officials declined to comment upon the sharing pattern.

"Tata Motors and Fiat will contribute Rs 650 crore each as equity to FIAPL for the expansion programme, while the rest will be raised through financial institutions," said Kapoor.

After the plant became fully operational, it would provide employment to 4,000 directly and another 8,000 indirectly, Kapoor said.

Answering a query on energy shortage in the state, Jairath said, "Power shortage in the state will not be an issue for the project as it has been given the status of a continuous process industry under the state government's mega project policy. The project will be provided 24x7 power supply through a separate electricity feeder."