Maruti to invest Rs 1,925 cr in third plant at Manesar

Proposed plant is expected to boost capacity by more than 17%.

Maruti Suzuki India (MSIL), the country's largest carmaker, plans to invest around Rs 1,925 crore for setting up a third plant at its second facility in Manesar. This will be Maruti's largest investment in a single plant in the country.

Osama Suzuki, director, MSIL, and chief executive officer of Suzuki Motor Corporation, said, "We had not estimated the pace at which demand for cars would grow in India. We are investing 35 billion yen for constructing a new plant at Manesar to meet the increase in demand."

With automobile sales reporting record growth in the first half of the year, Maruti Suzuki has been facing supply constraints in delivering some models. The need for capacity, greater than anticipated earlier, has come about because of the unexpected surge in demand for the multi-seater Eeco and also for the Swift.

Company executives said sales of the recently-launched Eeco were three times more than the initial target of 6,000 units a month.
 

THE NUMBERS MARUTI SUZUKI FACTORIES’ CAPACITY IN INDIA
Facilities	Capacity  (units per annum)
Gurgaon (three plants)	850,000
Manesar Plant A (functional)	350,000
Plant B (under construction)*	250,000
Plant C (proposed)	250,000
* to become operational in 2012

The proposed third plant is expected to boost MSIL's capacity by more than 17 per cent to 1.70 million units from 1.45 million units per annum (when the second plant at Manesar becomes operational).

R C Bhargava, chairman of MSIL, said, "The investment for the new plant would be put up for approval at the board meeting scheduled to take place in October. The timelines of the investment and for the commissioning of the third plant would be decided at that time."

Maruti Suzuki has two facilities at Gurgaon and Manesar. The company has three plants at Gurgaon, which can jointly churn out 850,000 vehicles, while the Manesar facility, with one plant at present, can produce 350,000 units a year. The company expects to roll out 1.20 million cars this financial year, 20 per cent more than last year.

MSIL is already investing Rs 1,700 crore for developing its second plant at Manesar. This plant, scheduled to come up by the beginning of 2012, can produce 250,000 vehicles. Company sources said the third plant might come up in mid-2013.

Demand for cars has risen by over 30 per cent this year. According to the Society of Indian Automobile Manufacturers, sales may double to 3 million units by 2015.

Maruti Suzuki has posted healthy growth numbers in the first eight months of this calendar year. Sales grew 24 per cent to 104,791 vehicles in August. This is the third time in this year that the manufacturer's sales have crossed the 100,000 mark.