New Delhi, 27 August 2013

The country’s largest carmaker Maruti Suzuki India (MSI) has said it will miss the target of commissioning its Gujarat plant due to the ongoing slowdown in the Indian automobile market.

“It is unlikely that we would be able to commission the Gujarat plant even by the end of FY16. The slowdown in the auto sector is very acute,” MSI Chairman Chairman R C Bhargava told reporters after the company’s 32nd Annual General Meeting (AGM) here.

When asked by when the company would like to start work and commission the facility, he said the company is trying to access the sales projections and would accordingly decide.

Last year, Suzuki Motor Corp Chairman Osamu Suzuki had visited the site in Gujarat where MSI plans to set up its third plant at an investment of Rs 4,000 crore.

As per the original plans, the company had planned to roll out 2.5 lakh cars annually by 2015-16 from the Gujarat plant. MSI is looking at a total annual capacity of 20 lakh units once the Gujarat plant goes on stream.

MSI at present has a total installed annual capacity of about 15 lakh units, which will go up to 17.5 lakh units by September this year when its third unit at Manesar goes on stream.

Bhargava said even the company’s vendors have not started work at the site in Gujarat so far.

“Vendors have not started work at the Gujarat plant because we have not started our work there. They will start only when they know the timeline when we will start and complete our work there. There work and ours go side by side and they do not want their capital lying idle” he added.

Commenting on the current economic scenario, Bhargava said he expects the ongoing fiscal to be another tough year.

“All the indications are that the GDP will grow below 5 per cent, the rupee is at an all time low, we do not see any change in the fundamentals, the situation will remain as difficult as before” he said.

He added that the only positive factor so far in the year has been the excellent monsoon season and hoped that the upcoming festival season would also be able to spur some growth.

“Elections are also coming up and during elections there is a spurt in sales but these are only temporary, so the real thing is that we need to see what happens after election and it would depend on what kind of government comes into power, whether it can bring reforms to spur growth” Bhargava said.

Car sales in India fell for a record ninth month in a row in July posting 7.4 per cent decline. During the April-July period of this year also, MSI’s sales have fallen marginally at 2,71,063 units as compared to 2,73,076 units in the same period of 2012.

“2011-12 was a very difficult year and 2012-13 has not turned out to be a better year, in fact it was more difficult in some more ways” Bhargava said.

He added that because of increase in diesel prices even the sale of the company’s diesel cars have slowed down.