Maruti to begin work on Gujarat plant this year

The company has already started work on the site even as it waits for shareholder approval regarding the Suzuki subsidiary building the plant

Maruti Suzuki India Ltd (MSIL) Chairman R C Bhargava said the company will start work on its Gujarat project before the end of this year.

“Some work is on. We are waiting for minority-shareholder approvals.” He was in Gandhinagar on Friday with parent company Suzuki Motor Corporation (SMC) Chairman Osamu Suzuki, who met new Chief Minister (CM) Anandiben Patel.

Bhargava described Suzuki’s visit as “courtesy.” He said the SMC chief briefed the CM about his recent meeting with Prime Minister Narendra Modi in Japan.

Earlier this year, Bhargava had met Anandiben Patel and state finance minister Saurabh Patel to discuss issues on value-added tax (VAT) in relation to the coming plant in the Mandal region.

Bhargava said efforts for finalising a fresh formula for VAT concessions were on. “The Gujarat government is very proactive and has repeated its commitment to the project. There are no issues on VAT.”

The state government had asked MSIL to come up with VAT concessions between MSIL and Suzuki Motor Gujarat Pvt Ltd (SMGPL), a wholly-owned subsidiary of SMC to make cars for MSIL at the Gujarat facility.

In June 2012, MSIL had signed a state support agreement (SSA) with the Gujarat government for the purchase of land and setting up of a facility. In January this year, MSIL’s board determined the plant will be built by SMGPL, which will exclusively make vehicles for MSIL. The company approached the state government around March to incorporate the necessary changes in the SSA.

Bhargava repeated there was no change of plan on the project, be it the completion time (2017) or the capacity planned (1.5 million vehicles a year).  

The initial capacity could be 250,000 vehicles a year. The company has two sites for setting up facilities in Gujarat,  700 acres each at Hansalpur and Vithlapur in the Mandal region.

Last year, Maruti had decided to delay the plant (from an original commission target of 2015-16), owing to dull market conditions.