INDIA BUSINESS WORLD - FEBRUARY 2007
The Month that was ...

SUZUKI REVS UP FOR FUTURE TO INVEST

SUZUKI Motor chief Osamu Suzuki announced the Japanese company would invest a total of 300 billion yen or Rs 10,800 crore in India going through to 2010. This includes a cumulative Rs 9,000 crore investment that covers Maruti's new Manesar plant, the new diesel engine plant (set up under a Suzuki and Maruti JV called Suzuki Powertrain India) also in Manesar and capacity ramp-up in Maruti's Gurgaon plants as well as the investment in new model development.

An additional Rs 1,800 crore investment includes a total Rs 720 crore (20 billion yen) in Suzuki Motorcycle India and around Rs 1,000 crore on working capital expenses up to 2010.

Speaking at the inauguration of the Manesar cluster of the new car plant, powertrain plant and the Suzuki Motorcycle India (SMI) plant, Mr Suzuki said: "So far we have already invested 100 billion yen and we will between now and 2010 invest another 200 billion yen." Of this, the investment in the new Manesar plant for Maruti and the diesel engine plant -both with a capacity of 1,00,000 units a year, scalable to 3,00,000 -will require Rs 2,500 crore each, he said. The ramp up in Maruti's Gurgaon plants, new model launches extension of R&D facilities with a test track and other incremental expenses will take care of the remaining Rs 4,000 crore.

As for Suzuki's motorcycle business, according to SMI managing director Satya Sheel so far Rs 250 crore has been invested in the plant, which has a capacity of 1,00,000 units a year, scalable to 200,000. The remaining just under Rs 500 crore will come between now and 2010 with Rs 200 crore due more immediately, say sources.

The new car plant will take Maruti's total capacity between Gurgaon and Manesar to just under 1 million units by 2010. As for the diesel engine plant, it has already started production and will initially cater to domestic demand for the Swift diesel. "Then gradually it will start exporting diesel engines to Hungary by the end of this year or the beginning of next," said Maruti MD Jagdish Khattar.

Maruti is also talking to the government regarding port facilities for its 1,50,000 unit exports of cars to Europe. For that, Mr Suzuki "humbly requested" an improvement in transportation and port infrastructure. When quizzed about whether Suzuki is working on a port project, Mr Khattar said: "After Mr Suzuki met the prime minister and other senior ministers, the PMO itself has been monitoring things and the response from different ministries has been encouraging. Things have been initiated. In some areas the policy of more towards government private partnerships. We have a consultant working on it and we will move when we get their report."

Suzuki and Nissan had earlier jointly made a proposal for a port project which came unstuck because Suzuki's talks with Nissan- beyond the 50,000 units of licenced manufacturing to be done by Maruti-did not work out.