Gujarat Special: Maruti gets its act going in Gujarat

While Maruti Suzuki is to start construction work on its new plant soon, it is also setting up an Auto Research Institute at Bavla near Ahmedabad. Shobha Mathur reports.

As Gujarat girds up for the next phase of development by vehicle manufacturers, leading the juggernaut of OEMs is the country’s largest carmaker Maruti Suzuki India that is all set to kick off construction work on its manufacturing facility in the state fairly soon, according to chairman R C Bhargava.

Besides setting up two manufacturing facilities in the state, Maruti is also working in sync with the state government to establish an Automobile Research Institute. The carmaker has zeroed down on Bavla, an educational hub in Ahmedabad district located about 104km from Maruti Suzuki’s first plant in Becharaji.

K T Vyas, officer on special duty at the Industrial Extension Bureau, Gujarat, says that the modalities are still being worked out and it will be set up just before Maruti starts operations in the state.

“It will offer Post-Graduate and Doctorate courses and undertake research work in automobiles. It will meet the requirements for skilled manpower, not only of Maruti but also other vehicle manufacturers in the region as it is also a state initiative. Besides, it will indirectly benefit the state by enhancing the quality of manpower available in Gujarat for the sector.” The funding is expected to be shared between Maruti and the state and industry sources say that the Gujarat government has provided around Rs 50 crore to the carmaker for setting up an institute for skill development in public- private partnership mode.

Why Gujarat matters
While Maruti is yet to take a final decision on the models to be produced at its Gujarat facility, Bhargava told Autocar Professional that setting up the Gujarat plant is an important expansion programme for Maruti. The facility will play as significant a role as the Gurgaon and Manesar plants in the company’s overall gameplan for upping production capacity in view of the expected growth in the Indian automobile market. Besides, developing its Gujarat plants as an export hub, these facilities will also cater to the needs of the markets of southern India as Gujarat is in closer proximity to them compared to Delhi-NCR.

On April 26, Osamu Suzuki, chairman of Suzuki Motor Corporation, had met the chief minister of Gujarat, NarendraModi to discuss Maruti’s plans for starting work on its new manufacturing facility. He also visited the Maruti site where construction is slated to begin from July. Suzuki Motor Corp would be pleased with Maruti’s recent sales performance. The carmaker posted an 80 percent rise in its January-March 2013 net profit, thanks to cheaper import of parts as a result of a weakening Yen and a smaller royalty payment to its parent. The carmaker has acquired about 600 acres of land at Hansalpur at Becharaji for the first plant with another 600 acres taken for future expansion at Vithalpur, about 40km from the first site and 60km from Sanand, where the plants of Ford India and Tata Motors are located.

Maruti’s LCV to roll out from Gujarat plant
While Maruti remains tightlipped about the models to be produced at its Gujarat plants, Autocar Professional had revealed in its May 15 issue that the carmaker is exploring options of producing its small light commercial vehicle with a payload capacity of around 1-1.5 tonnes. Likely to be based on the Omni truck platform of Suzuki available in the South East Asian markets with smaller payload, it will be pitted against the popular Tata Ace.
Among the other car models to be produced, the Swift is also under the scanner as is the export model A-star. The A-star that targets European and non-European markets is exported from the Mundra Port after being transported from Manesar where it is currently produced. For Maruti, it would be more economically viable to manufacture this model at Gujarat and then ship it out of Mundra to save logistics costs.
In the long term, Maruti is looking at exporting a million cars out of Mundra Port and the port’s proximity to the carmaker’s facilities in the state will spur both import and export shipments.
Maruti has already established the initial infrastructure in terms of its pre-delivery inspection facility at Mundra some years ago. The facility can park up to 20,000 cars at any given time at present but the capacity can be stepped up as per requirement.

Logistics pay off
“Our decision to invest in Gujarat was keeping in mind our investment in the Mundra Port facility. At present, we use the Mundra, NhavaSheva and Mumbai ports for our export shipments. Mundra will be closer to our manufacturing facilities,” says a company spokesperson. The NhavaSheva port of Mumbai today accounts for very small export numbers. The major chunk of shipments is from Mundra Port due to lower logistics costs and better facilities.

Furthermore, Gujarat is one of the big markets for Maruti and the Alto, Swift and Wagon R are popular models in this region. CNG vehicles are also high sellers as the state has a good network of CNG filling stations that are yet to make a mark across India.

Currently, the company’s export volumes revolve around 120,000 units with specific focus on non-European markets that today constitute over 80 percent of the total. Some of these prominent markets are Malaysia, Thailand, Algeria, Chile, Indonesia, South Africa, Hong Kong and Australia. This focus is likely to continue in future as well.

Meanwhile, Maruti’s new assembly line at Manesar will go on stream by Q3 of FY’14. The company has also invested in its Rohtak R&D facility which the company says is progressing as per its plan and schedule. The company’s new diesel engine plant for 1.3-litre Multijet engines at Gurgaon will commence operations in the second half of this year. It will have an annual capacity of 150,000 units per year in the first phase to be ramped up to 300,000 units in the second phase. This will help meet the skewed demand in favour of diesel versus petrol cars despite the rising price of diesel.

Photograph: Osamu Suzuki, chairman of Suzuki Motor Corporation, with NarendraModi, chief minister of Gujarat.