Suzuki Motor Corporation (SMC) will invest another 100 billion yen (approximately $878.58 million or Rs 5,700 crore) in India to expand its Gujarat production facility by early 2020s, Japanese publication Nikkei reported on Wednesday.
The proposed investment is over and above the Rs 8,500 crore that the Japanese auto maker had pledged to set up Suzuki Motors Gujarat (SMG), its wholly-owned subsidiary to supply cars to meet Maruti Suzuki’s increasing sales demand.
“Plans call for a third production line in the early 2020s for a factory in the western state of Gujarat, where the company only recently announced a second line to be completed in 2019,” the Nikkei report said.
The report came a day Indian finance minister Arun Jaitley met SMC boss Osamu Suzuki and other Japanese businessmen of the east Asian nation, and pushed for more investment in India under the “Make in India” initiative.
Suzuki Motor Corporation is the Japanese parent of Maruti Suzuki India (MSI), which holds nearly 51% market share in India as of April 2017. The country’s top automaker has two production facilities in India in Haryana’s Gurgaon and Manesar.
In Gujarat, SMG set up a facility in Hansalpur near Ahmedabad with plans to set up three production lines, one of which started making the premium hatchback Baleno in February, and added 10,000 units to the MSI’s sales March onwards. The second line with an investment of Rs 2,600 crore is under construction and is expected to be functional by 2019. The company plans to set up the third one by early 2020s.
According to the Nikkei report, “The Gujarat plant’s third assembly line is seen costing around 60 billion yen, but Suzuki’s investment may well reach the 100 billion yen neighbourhood when factoring in production lines for parts such as engines and transmissions. This would bring the company’s total spending on the factory to between 200 billion yen and 300 billion yen.”
SMC, whose Indian wing MSI sold more than 1.51 lakh units in April, plans to establish Gujarat not only as a key production hub but also as its export base to Africa and Europe. SMC estimates the third line will raise its net Indian production capacity to about 2.25 million or 30% more than the present volumes.
Of the 2.98 lakh units which SMC sold in March 2017 globally, roughly 1.4 lakh or almost 47% came from Maruti Suzuki India.
In April, SMC announced a joint venture with Toshiba Corporation and Denso Corporation investing roughly Rs 1,200 crore to set up a lithium ion facility in India to make battery packs for electric cars.