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Suzuki's Gujarat plant to export 10% of output

Suzuki Group's first plant came up in Gurgaon in Dec 1983 with initial capacity of 40,000 units

BS Reporter  |  Hansalpur 

India’s largest passenger car maker Maruti Suzuki India Ltd has laid the foundation for its third manufacturing site at Hansalpur near Mehsana, around 100 km from Ahmedabad and 60 km from the auto hub of Sanand.

The 640-acre site will house three plants, with a total capacity of 750,000 units a year. These will come up at an investment of around Rs 8,000-8,500 crore. But the significance of the third plant site lies in the fact that the company expects to export at least 10-15 per cent of its production.

What’s more, according to company officials, while deciding the product portfolio for the Gujarat facility, export-specfic models would be considered.

At an investment of Rs 3,000 crore, the first of the three plants at Hansalpur has a planned capacity of 2,50,000 units per annum (pa) and is scheduled to go onstream in May 2017.

As Osamu Suzuki, the chairman and chief executive officer of Suzuki Motor Corporation (SMC), the Japanese parent of Maruti Suzuki India said at the foundation laying ceremony on Tuesday, the initial capacity of the first assembly line at Hansalpur would be 1,50,000 units that would be eventually scaled up to 2,50,000 units yearly. As for the second and third plants at Hansalpur, the company did not give out any time-frame.

R C Bhargava, the chairman of Maruti Suzuki India, said it would depend on the market conditions, and how the company increases its market share in the coming years. The firm has 500 acres for production at the Hansalpur site. Remaining would be used for roads and other infrastructure including water bodies.

The company also did not wish to comment on which vehicles it would make at the Gujarat site. Bhargava said that what products to be made at Gujarat would have to be planned along with Gurgaon and Manesar, so as to optimise the cost of production as well as logistical costs. However, the Gujarat unit would obviously focus on exports thanks to the proximity to the Mundra port, and at least 10-15 per cent of the production would be for exports.

Maruti’s Gujarat project would be set up by a subsidiary of SMC, Suzuki Motor Gujarat Pvt Ltd that would supply vehicles exclusively to Maruti Suzuki India. The company also has a second site near Hansalpur, at Vithlapur, where the company plans to set up production facilities, once it exhausts the capacity at the first site.

Bhargava had earlier indicated that the second site could also have a similar installed capacity of around 7,50,000 units, taking Maruti Suzuki India’s net installed capacity in Gujarat to 1.5 million units per annum, a figure that is equal to its current installed capacity in the country combining plants at Gurgaon and Manesar.

Hansalpur is around 60 km from Sanand, another auto-hub in Gujarat and about 30-odd km from Mehsana, the nearest town.

Suzuki Group’s first plant came up in Gurgaon in December 1983 with initial capacity of 40,000 units. Later in February 2007, the company’s Manesar plant was inaugurated in an area spread across 600 acres.

Today, the Suzuki Group manufactures at two sites in India, one in Gurgaon and another at Manesar with a combined production capacity of 1.45 million vehicles annually. Spread across 300 acres, the Gurgaon manufacturing facility has three fully integrated manufacturing plants with all three plants having an installed capacity of 3,50,000 vehicles annually. However, productivity improvements have enabled it to manufacture 9,00,000 vehicles annually. Equipped with more than 150 robots, out of which 71 have been developed in-house, the Gurgaon facilities manufacture 2,40,000 K-Series engines annually, apart from cars which include Alto, WagonR, Estilo, Omni, Gypsy, Ertiga, Ritz and Eeco models.

Upbeat on the upcoming Gujarat project, Suzuki said, “You can call the Gujarat project as Suzuki's second project,” adding the company has completed 30 years in India as currently manufactures around 1.2 million vehicles annually. Bhargava too highlighted that when the Gurgaon project had started, it was only a dusty village. Addressing the villagers present on the occasion, he said that Becharaji is far more developed than what Gurgaon was at that time. “I am confident that after Maruti comes up here, the entire landscape will change, it would usher in a completely new lifestyle,” Bhargava added.

Reiterating the benefit to the local community, Bhargava said that when a car manufacturing unit comes up, a whole lot of additional investments also come in, those in car sales, repairs, spares, along with drivers, mechanics etc; it is a huge economy in itself. Also, almost all of the company's 300 vendors are expected to come to Gujarat, as it makes logistical sense to have the suppliers in the vicinity. Apart from the 3,000 direct employment at the Maruti plant, huge employment opportunities are expected to be generated in the ancillaries as well.

Chief Minister Anandiben Patel too tried to strike a chord with the local villagers saying, “You are going to have Suzuki in place of babool trees here.” Drawing a leaf from erstwhile Gujarat chief minister Narendra Modi’s development agenda, she said that Modi had decided that a three-pronged approach could only ensure total development of the Mandal region; agriculture and animal husbandry on one hand, industry on the other and social service as the third dimension.

Speaking to about 10,000 villagers who had assembled from nearby villages for the event in about 200 buses, the chief minister said, “If the government takes some thing from you, it gives you back ten times that.” She referred to the ten special investment region (SIRs) planned in Gujarat and said that when a simple four-lane road can raise land prices, imagine the amount of development large scale industrial projects can bring.

The state government’s plan to develop an SIR in Mandal-Becharaji region had met with a roadblock, when the government had to prune the size of the original SIR to almost one-fifth of its size in August 2013 owing to protests from villagers.

Maruti is also working with the state government to work out value-added tax (VAT) related issues on the proposed investment here, as in a change from the original plan, SMGPL is now setting up the facility. The company had also come under pressure from institutional investors, regarding the transfer of Gujarat plant to Suzuki. It had decided to seek minority shareholders’ nod for the same. As of now, as Bhargava said here today, the company is waiting for amendments to the Act 2013 that has already been cleared by the Lok Sabha to go through the Rajya Sabha, before it goes for voting.

  • The 640 acre Hansalpur site will house three plants, with a total capacity of 750,000 units per annum.
  • Hansalpur site is MSIL's third such in the country.
  • MSIL's first plant site in Gurgaon, which came up in December 1983, is spread across 300 acres.
  • The company's second plant came up in February 2007 at Manesar in an area of 600 acres.
  • Combined capacity at MSIL's Gurgaon and Manesar sites is 1.45 million.

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First Published: Thu, January 29 2015. 00:42 IST