Maruti Suzuki to invest Rs 26.0 billion on new diesel plant, R&D centre

New Delhi, Mar 24 (PTI) The country's largest car maker Maruti Suzuki India today said it will invest Rupees 26.0 billion (about USD 520 million) to set up a new diesel plant at its Gurgaon facility and to expand R&D activities at Rohtak by 2014. The company's Board of Directors, in a meeting held today, approved setting up of a diesel plant in Gurgaon at an investment of Rs 17.0 billion (about USD 340 million). It also allowed the company to ramp up investment by Rs 9.0 billion (about USD 180 million) at its upcoming R&D centre in Rohtak. Both Gurgaon and Rohtak are in the northern state of Haryana, with Gurgaon even being a city on the outskirts of Delhi. "We are going to invest Rs 1,700 crore (about USD 340 million) to set up the diesel plant, which will be constructed inside our Gurgaon manufacturing facility. This will be a brand new unit and will be owned by the company," Maruti Suzuki India (MSI) Chairman R C Bhargava told reporters here. Talking about its upcoming R&D centre in Rohtak, Bhargava said: "The board has also approved an additional investment of Rs 900 crore (about USD 180 million) to set up various facilities, including testing for emission and safety. This will be over and above the Rs 1,500 crore (Rs 15.0 billion, about USD 300 million) earlier announced to set up the test track." The company will build the plant in phases and will start operations by mid-2013 with an initial capacity of 1.5 lakh (150,000) units a year, he added. "In the first phase, we will invest Rs 950 crore (Rs 9.5 billion, about USD 190 million). After that, we will double the capacity to three lakh (300,000) units per year by 2014 and it will entail a total investment of Rs 1,700 crore (about USD 340 million)," Bhargava said. The company, which is sourcing diesel engines from Suzuki Powertrain India Ltd (SPIL) and Fiat India, had put on hold investments on the plant awaiting clarity over any additional taxes on diesel vehicles in the Indian Budget. When asked about the emphasis on diesel cars, Bhargava said the demand for diesel vehicles has soared as this fuel is sold at a subsidised rate. "The petrol car sales in the ongoing fiscal declined by 15 per cent. In the next fiscal, we will still witness fall in petrol car sales, but we are trying to bring down this decline to 6 per cent, which will be selling about 50,000 petrol cars less," he added. MSI's Gurgaon plant produces all of its petrol engines. It has an installed annual capacity of 7.2 lakh (720,000) units that the company managed to stretch to about 13 lakh (1,300,000) units. "Because of decline in petrol cars, the company expects about 40 per cent of its petrol engine capacity at Gurgaon to be idle," Bhargava said. However, the company is expecting sales of its diesel vehicles rising by 1.5 lakh (150,000) units in the next fiscal compared to about 2.4 lakh (240,000) units in the current 2011-12 ending with March. "With both petrol and diesel cars, we are expecting an overall growth of about 10 per cent in FY'13," Bhargava said. Following increase in demand for diesel cars, SPIL is ramping up its diesel engine capacity to three lakh (300,000) units per annum from 2.4 lakh (240,000) units. Moreover, MSI will also get one lakh (100,000) diesel engines a year from Fiat, supply of which have already started from January this year. PTI