Maruti to invest Rs2,600 crore to meet diesel car demand

Maruti Suzuki said it plans to invest an additional Rs2,600 crore (US$502.1 million) in Haryana, India, by 2015 to meet the demand for diesel-powered cars and boost the company’s research and development capabilities. Maruti Suzuki had earlier already pledged Rs1,700 crore (US$328.69 million) to construct a third assembly line at its second plant in Manesar.“Our second diesel engine plant in Manesar which will come up by mid-2013 will require an investment of Rs1,700 crore (US$328.69 million). We will put in additional investments of Rs900 crore (US$17.38 million) to create testing facilities inside the Rohtak R&D center,” said R.C. Bhargava, chairman of Maruti Suzuki India. Maruti Suzuki makes diesel engines through its subsidiary, Suzuki Powertrain India, near its Manesar factory in Haryana. The plant has a capacity of 300,000 engines per annum. The company’s second diesel plant will have an initial capacity of 120,000 diesel engines per annum by mid-2013. Output would be increased to 300,000 units by 2015. The Indian government’s refusal to impose higher taxes on diesel cars has spurred fresh investments. But Bhargava said that the company is not looking at a long-term investment decision for diesel engines because of the lack of government policy on fuel prices. “I would appreciate if the government policy would be on a long-term basis. In 2010, the gap between petrol and diesel (fuel) was Rs 9 (US$0.17) per liter. Now, it is Rs 25 (US$0.48) per liter, he said. Maruti Suzuki said it expects sales to increase by 10% in the 2012-13 financial year. (March 25, 2012)