Suzuki Offers To Set Up Gearbox Unit

Maruti Udyog Ltd (MUL) has set up a product committee, consisting of technical and marketing personnel, to study the introduction of new models. The panel is expected to submit its recommendations to the MUL board by next month.

The governments joint venture partner in MUL, Suzuki Motor Company, has also prepared a detailed project report for a gearbox manufacturing unit in India. The Japanese giant envisages an investment of about Rs 1,200 crore in the plant. It has suggested that the project be completed in two phases, with the first to be completed in 24 months and the second in 13 months.

 

Government sources said Suzuki has indicated that the project could be either financed through MULs internal resources, or Suzuki and MUL could set up a separate joint venture to fund the new project. The company has already received feelers from the governments of both Haryana and Uttar Pradesh to locate the proposed 14-acre factory in their respective states.

Gearbox technology is one key area which has not yet been fully indigenised by MUL. The issue has been one of the points of dispute between the government and Suzuki, with the government earlier accusing Suzuki of not providing the technology because of its own interest in making money by selling components.

However, Suzuki Motor had said the primary reason for the delay in setting up a gearbox facility was that such a plant needs economies of scale which are not available in India. Besides, since the government did not even have enough money to expand MULs equity capital, it could hardly be expected to have enough cash to set up a gearbox facility, Suzuki had argued.

In an earlier blueprint, Suzuki had said it was willing to set up a gearbox facility in India, provided it had majority control in the separate company to be set up for this purpose. It is not yet known whether Suzuki is still persisting with this condition in its new offer.

Sources said both Suzuki and the government have also agreed on the immediate need to introduce at least one new model in the near future to take on the challenge of other car companies like Telco, Daewoo and Hyundai.