Maruti Suzuki said it expects to roll out the first car from its new Gujarat project in 2017.
Chairman RC Bhargava said that market conditions are changing, having slowed the project due to slack sales in India last year. He added: “We are confident of starting production in 2017.”
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Car sales fell 10% from 1.99m units in 2012 to around 1.8m last year. Bhargava expressed confidence that Prime Minister Narendra Modi and his new government would bring about radical changes to revive the economy.
Maruti Suzuki signed an agreement with the state government in June 2012 to build a manufacturing facility with a capacity of about 250,000 units a year. Earlier this year the company announced the transfer of control of the Gujarat manufacturing plant to Japanese parent Suzuki Motor.
Maruti Suzuki India will kick off a roadshow this month to explain to global and domestic investors the move to let parent Suzuki own the plant.
Bhargava, along with managing director and CEO Kenichi Ayukawa and CFO Ajay Seth will meet institutional investors from the US, UK, Asia and India.
Suzuki announced in January it would spend US$488m to build the Gujarat plant. Maruti stated that investments in the plant would be funded by Suzuki via a wholly owned subsidiary through depreciation and equity brought in by the parent without a ‘mark-up’ on cost of production, as was proposed before.
Also, in case the contract manufacturing agreement between them is terminated, the facilities of the Gujarat subsidiary would be transferred to Maruti at book value.
The plant, which would be Suzuki’s first fully owned factory in India, is being planned with an initial capacity of 100,000 units a year, all of which will be supplied to Maruti.
