Maruti may double capacity at new India plant: Report

[1]

Japanese-owned Maruti Suzuki may double capacity at its planned car plant in Gujarat state, a report says, as it reviews strategy following deadly labour unrest at another major factory.

The Gujarat plant -- due to open 2015-16 -- will be the first for India's biggest carmaker outside the northern state of Haryana, where a riot by workers last month at its Manesar factory led to the death of a manager and injury to 96 supervisors.

Dow Jones Newswires, quoting an unnamed senior Gujarat state official, said initial capacity of the new plant could be as high as half a million cars per year -- twice what Maruti originally envisioned.

Maruti is investing Rs 40 billion ($727 million) to build the factory. The report late Friday came as Suzuki Motor chairman Osamu Suzuki travelled to the western Gujarat state to meet chief minister Narendra Modi.

Suzuki is on a week-long visit to India to take stock of the situation at Maruti, which is crucial to the Japanese firm's fortunes because it contributes one-third of its pre-tax profit and accounts for half of its production outside Japan.

A Maruti spokesman would not comment when asked about plans to enlarge the initial planned capacity of the Gujarat plant at Mehsana, 100 kilometres (60 miles) from the state's main city of Ahmedabad.

Deepesh Rathore, an analyst at consulting firm IHS Automotive, told Mint newspaper 'there is a sense of urgency to start operations from Gujarat as Manesar has been problematic for them'.

Last month's violence at the Manesar plant, near New Delhi, was the worst since Maruti cars started rolling off assembly lines in India in 1983. Maruti's other factory is located in nearby Gurgaon.

The Indian subsidiary, the country's largest carmaker by sales, lost $9 million a day during a subsequent 21-day plant shutdown, which ended earlier in the week, analysts estimate.

Gujarat, with its long coastline allowing easy exports, has emerged as a popular centre for car production with US giants General Motors and Ford also setting up factories there.