Maruti to set up shop in Gujarat

Gujarat finally bagged Maruti’s new mega factory as the country’s largest carmaker, frustrated by the labour trouble in Haryana, cleared a proposal to build a facility outside its home state to add to its production capacity. It will be the second biggest automobile project for Gujarat after it won Tata Motors’ Nano project in 2008 when the company was forced to move out of Singur due to political unrest. Maruti’s board on Saturday approved the proposal for the new factory in Gujarat which, when commissioned, would be its largest in India. Maruti’s proposed plant in Gujarat, when commissioned, could perhaps be the biggest even for its parent Suzuki. “The board has granted approval to purchase land in Mehsana district in Gujarat for future expansion of manufacturing facilities. This purchase will be subject to final negotiations on price and all legal formalities,” company chairman R C Bhargava said. The company is expected to invest Rs 18,000 crore in its new facility (including Rs 6,000 crore by vendors) that is likely to start production after 2015. The new site is being planned to add 2 million capacity to Maruti’s production, which will touch 1.75 million units from its factory sites in Haryana (Gurgaon and Manesar). The company is looking at 1,400 acres for the new facility,of which 400 acres will be used by its vendors. Sources say the company wants to “hurry up” with work at its Gujarat facility as it battles labour problems at Manesar, which has badly impacted business over the past three months. Three crippling strikes saw Maruti suffer a production lossof nearly 83,000 cars that resulted in a turnover loss of around Rs 2,500 crore. Bhargava, however, did not comment on whether the company was expanding beyond Haryana due to labour issues. He only said Gujarat offered a base in the western part of the country, closer to the port, which will help in reaching export markets faster and more efficiently. Maruti’s expansion out of the state,however, comes as a huge blow for the Haryana government that many privately blame for “inept” handling of labour issues. Two-wheeler major Honda Motorcycle and Scooter India, that also faced a huge labour unrest at its Manesar plant, has already gone beyond the state with new factories in Rajasthan and Karnataka. Gujarat, on the other hand, is on a roll as it emerges as the ‘destination next’ for auto majors in India beyond the traditional hubs in Haryana, Tamil Nadu and the Pune belt. Already, several automakers, ranging from Tata Motors to Ford and Peugeot-Citreon, have started work on setting up facilities in Gujarat.