M A I N   N E W S

Manesar effect? Maruti says new plant in Gujarat
To buy 1,500 acres in ‘Modi land’; company’s Q2 profit dips 60%

New Delhi, October 29
Maruti Suzuki India today posted a 59.81 per cent fall in its net profit at Rs 240.44 crore for the quarter ended September 30, mainly due to production loss at Manesar because of labour unrest and foreign exchange loss.

The company's board, meanwhile, has approved the purchase of land in Gujarat, measuring up to up 1,500 acres to set up manufacturing plant in the state.

The board of directors approved Maruti Suzuki India’s third manufacturing facility, which will come up in Mehsana district of Gujarat. It will be the company's first major establishment outside its base in Haryana.

“The board has approved that we should go ahead and purchase the land. We are looking at an area of maximum of up to 1,500 acres, out of which 400 acres will be for the vendor to develop their plants," MSI chairman RC Bhargava told reporters here.

The land will be given partly by the Gujarat Government and it will be partly acquired from private owners, he added. “The idea is not to set up the plant immediately, but do it as and when the market situation demands... The board wants the purchase of the land to be completed as soon as possible, may be within the next four weeks,” Bhargava said.

When asked about the reasons for going to Gujarat, Bhargava said: "It is for the kind of positive place to do work as we already have the Mundra port, which we are using for almost all of our exports. We do expect that once the global market, particularly Europe recovers, demand of cars will shift towards smaller cars. Therefore, we want to be ready for meeting the requirements for the global market.”

Besides, the company will be able to serve the western and southern market from Gujarat at a lesser logistical expenses than selling cars from its current base in the North. Asked if the company could leave its facility in Manesar due to repeated adverse labour situations, Bhargava said: “At any stage, we are not moving out from Manesar. It does not make any sense.”

Meanwhile, the rate of decline in company’s profit is the biggest since the third quarter when it had reported a similar drop.

“This has not been a good quarter for Maruti. Market has been declining largely because of high interest rates and fuel prices. The result of all these is the increase in cost of ownership in cars, which has mainly hurt marginal customers, who buy mainly M800 or Alto," Bhargava said.

The company has seen the biggest drop in sales in its best selling model Alto. During the quarter, Alto sales dipped by about 20 per cent to an average of around 22,000 units a month from about 27,000 units in the year-ago period. 

 

Modi hails decision  Gujarat Chief Minister Narendra Modi on Saturday welcomed Maruti Suzuki's decision to set up a plant in the state, saying that it would accelerate the growth of the state's automobile sector. “I welcome Maruti Suzuki's decision to come to Gujarat. Gujarat is moving ahead fast as Asia's auto hub. With Maruti, the pace will accelerate,” Modi said on twitter. — PTI