Maruti to set up new diesel engine plant at Gurgaon

Maruti Suzuki India today announced plans to set up a new diesel engine plant in Gurgaon, at a cost of Rs1,700 crore, as demand for diesel-fuelled cars is growing at a much faster pace than petrol cars in India.

The new plant will have an annual production capacity of 3,00,000 units when fully operational by 2014. The company will build the plant in phases and will start operations by mid-2013 with an initial capacity of 1,50,000 units a year.

''This will be a brand new unit and wholly owned by the company," Maruti Suzuki chairman R C Bhargava told reporters in New Delhi.

"In the first phase, we will invest Rs950 crore. After that, we will double the capacity to 3,00,000 units per year by 2014 and it will entail a total investment of Rs1,700 crore," Bhargava said after a meeting of the board of directors.

Maruti's Gurgaon plant at present produces mainly petrol engines. It has a capacity of over 8,00,000 units per annum.

The decision to set up the new plant in the Gurgaon-Manesar 'car belt' in Haryana near Delhi seems interesting to some observers, considering the continuous labour trouble there.

Maruti's flagship Manesar plant, which produces some of its best-selling models, was crippled for much of last year due to a debilitating labour unrest, which has led to a slump in production and serious erosion of market share as well as profitability for the company.