Maruti Suzuki stock gains over 2 per cent on news of Africa plans

Shares of Maruti Suzuki India Ltd, the country's biggest carmaker, gained as much as 2.2 per cent in intraday trading on the Bombay Stock Exchange (BSE) today, following reports that the company is planning to set up its first overseas assembly plant in Africa.

A Bloomberg report quoted chairman RC Bhargava as saying that the company is scouting for new export markets, especially in Africa, which is more or less untouched.

Maruti Suzuki India Ltd is considering setting up its first overseas assembly plant in Africa in an attempt to revive flagging exports, according to Bhargava.

''We will look at local assembly for two reasons,'' Bhargava said. ''Firstly, there's usually a tax advantage. And second, there's pressure from governments in these countries to assemble models locally.''

"Countries that are on the cusp of motorisation may be key to Maruti's plan of doubling exports in the next four years as Europe struggles to recover from a slowdown,'' the report quoted the company's head of sales Mayank Pareek as saying.

The automaker may face hurdles setting up any production facility overseas as a few countries may mandate local purchase of some components. Setting up an ancillary base will be the biggest challenge. It will be a whole new learning experience, says the Bloomberg report.