Maruti Suzuki India reconsiders the timing of proposed plant in Gujarat

Tuesday 13 December 2011, 12:34 PM by Vikas Yogi

The Indian auto giant Maruti Suzuki has said that it may defer the its prospective investment in the state of Gujarat for its proposed manufacturing plant. The company is likely to relook at the timing of the proposed investment in Gujarat as the industry is going through a slowing demand momentum due to continuously rising fuel prices and high interest rates. It is to be mentioned here that the car sales in India have decreased 4 percent during current fiscal.

In a statement given to ET, Maruti Suzuki India Limited (MSIL) Chairman, Mr. R C Bhargava said, "We may relook at our long time investment because of the slowdown." He added, "We are relooking at the timing of our investment. We may have to delay some of the investment by six months to a year."

The year 2011 has been a sluggish year for the company as its sales suffered badly due to a series of labor strikes and rising input material costs. The production at the company’s Manesar plant halted again and again due to these labor strikes, further harming the deliveries of its popular cars in the Indian market.

Moreover, the increasing competition in the volume driven mass segment of cars, a segment where Maruti has been in a leading position for more than a decade now, has further weakened the company’s position with its market share slumping steeply.

However, the company has decided to go ahead with the investment plans in the existing plants of the company which is in the range of Rs 3,000-4,000 crore.

At present, the company has 3 plants in the Indian market including two in Manesar and 1 in Gurgaon. The third plant in Manesar will take the total capacity of the company to 17 lakh units per annum from current capacity of 12 lakh units per annum.

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