Maruti Suzuki Gujarat plants to push capacity to 3 million by 2017

Maruti Suzuki India Limited, the country’s largest auto makers have recently purchased land for their fourth plant, and their second in the state of Gujarat. This is in a bid to come up with their fourth plant in the country which will double annual production capacity to close to 3 million units.

Maruti Suzuki Gujarat plants to push capacity to 3 million by 2017The new factory, once commissioned, is expected to have capacity of 750,000 units per annum. This will help Maruti Suzuki India Ltd. to expand export operations to Europe and Middle East due to its close proximity to the coast.

In the meanwhile, work on the company’s third plant in Mehsana district, Gujarat is about to commence with production scheduled to begin in 2015. Maruti Suzuki India, currently has two plants, one in Manesar and one in Gurgaon. From these plants, MSIL manufactures 14.50 lakh vehicles annually. Once the third Gujarat plant is operational, they plan to have output increased to 22 lakhs (2.2 million) annually and once the fourth plant gets going, the output will reach 3 million units annually.

On the financial front, MSIL recentley announced that their quarterly profits jumped 144%. This is the first time their profits were in green in the last 18 months, which were affected majorly due to the unrest at their Manesar plant. Apart from these positivities, MSIL is facing a strong legal battle against Haryana State Industrial and Infrastructure development Corporation Ltd. This is for a demand of Rs.501.24 crores as additional compensation for land bought in Manesar. This entails an additional demand by land owners in the area while the order has been reserved by the Supreme Court.

Maruti Suzuki however did not disclose amount of additional land area or any details of what total amount of compensation to be paid to land owners would entail. Two notices were received by the company. The first one was in March 2012 while a second notice was issued on June 25, 2012. The matter is pending though MSI have been given two options to make the payment in five half yearly installments with interest at the rate of 11% on unpaid amount.