Suzuki's three plants in Gujarat to cost Rs 8,500 cr: RC Bhargava

Japanese auto major Suzuki Motor Corporation (SMC) plans to set up three plants at Hansalpur in Gujarat with a total capacity of 750,000 vehicles. According to R.C. Bhargava, Chairman of Maruti Suzuki India (MSIL), the total cost is expected to be Rs 8,500 crore.

The vehicles manufactured at Hansalpur facilities will be supplied exclusively to MSIL and support its objective of reaching annual sales of two million units in the medium term.

According to the company, the cost of the first plant will be Rs 3,000 crore. It will begin operations by mid-2017 and will have an initial production capacity of 250,000 units per year. Bhargava said plans for the remaining two plants will depend on market demand.

The new plant was originally proposed to be set up by Suzuki's Indian arm, MSIL. In June 2012, the Gujarat government had signed a State Support Agreement with MSIL and allocated 700 acre to the company near Hansalpur for the unit. However, later it was decided that the plant will be set up by Suzuki Motor Gujarat Pvt Ltd, a subsidiary of SMC.

The transfer of the plant had run into a controversy last year after institutional investors in MSIL opposed the move saying it would hurt shareholders' interest. This forced the company to tweak the agreement and seek shareholders' approval for the same. The meeting of shareholders is yet to be called.

Osamu Suzuki, chairman of SMC, said at the Vibrant Gujarat Summit that the state is "definitely superior" in terms of infrastructure development and ease of doing business and hence "opted Gujarat as the next location for our plant".

MSIL has two existing plants at Gurgaon and Manesar in Haryana.