Maruti Suzuki India Limited is likely to fulfil all the formalities to acquire land for its plant in Gujarat within a month. However, the company has no plans to commence the construction process in the near future, according to the top company officials.
MSIL Chairman R.C. Bhargava stated that the operations of building the plant at Gujarat will start only after the production process at the Manesar plant kicks-off in full swing.
During a seminar at Indian School of Business, Bhargava said, "Land acquisition process is on and we hope it will be concluded in this month. I don't think we will start work on it for some years from now at least two to three years. We should see the market situation."
As a matter of fact, the company has two facilities at Gurgaon and Manesar in Haryana, with a cumulative capacity of producing 1.2 million vehicles every year.
If a senior official of Gujarat government, who is closely associated with the developments, is to be believed, the land requirement of MSIL, as of now, stands up to around 1,000 acres.
"We will need Gujarat plant when the Manesar plant capacity is fully utilised. So, that depends on how the market grows. So, I can't give a date on this," Bhargava added.
The MSIL board recently gave a green signal for the procurement of up to 1,500 acre of land in Mehsana district of Gujarat. The market leader announced in June that it would accompany the vendors, by possibly investing Rs. 18,000 crore in Gujarat, with the aim of manufacturing nearly 20 lac units per year in the state.
"We have to see how the market goes. It takes three years to build a new plant. So, if I need to take production from Gujarat plant in 2016, then I will have to start work in 2013. Nobody can create capacity when market does not require. We create capacity to make and sell cars. So if there is no demand for cars I don't have to create that capacity," Bhargava added.
Commenting on the present state of the automobile industry, R.C. Bhargava said that the pressurising trends have taken a toll on the auto market. He also mentioned that for Maruti the year 2011 will culminate on a poor note, as compared to the last year.
"I cannot tell in terms of percentage because there are four more months to go. Let’s see how these four months to go. Chances are will be less than last year," Bhargava said.
As a matter of fact, till November 2011, MSIL was able to sell-off 6,81,200 units, which comes out as a considerable fall of 17.8 per cent, as against the figures of the same month last year. Moreover, the exports saw a decline by 24.4 per cent, tumbling to 73,783 units at the end of November.
Thus, Maruti would consider the present talks with the Gujarat government as a great opportunity to bring back the shine that it lost during the recent times.
