The auto hub – India

THE AUTO HUB – INDIA

It is not even a fortnight that the joint venture announcement of manufacturing Nissan cars through a joint venture between Nissan and Suzuki motors at Maruti Udyog Limited (MUL) Gurgaon (India) plant is announced another interesting proposal has come from Suzuki motors themselves. It is no doubt that India seems to be the most preferred place for international automobile manufacturers.

Now MUL in a joint venture is likely to build bike and car parts for Suzuki. India’s largest car maker Maruti Udyog is now lending its Japanese parent Suzuki Motor a helping hand in producing two-wheelers in India. Japan’s Bellsonica Corporation is forming a joint venture with MUL to manufacture sheet metal, chassis and other critical components used in building Suzuki motorcycles and cars in India.

The venture, in which MUL will hold a 30% stake, would be a core supplier to Suzuki’s automobile ventures in India, including MUL itself and the recently reborn two-wheeler JV, Suzuki Motorcycles India.

Bellsonica sources said that they have sought FIPB nod to establish this JV in India and ride the current boom in automobile demand. With the automobile market growing at a rapid pace it seems the Bellsonica has decided to set up its Indian operations and ride the boom. The venture would commence operations in November 2007 which is earmarked to be set up with an initial paid-up capital of $ 3 million. The venture is confident of turning profitable from its third year of operations. It is planned that the venture will manufacture two and four wheeler sheet metal parts, chassis, structural and rigging components. This will be in addition to producing tooling and jigs. The firm has projected a net profit of $ 100,000 in 2009 on a revenue of $ 12 million.

MUL has been a core partner of Suzuki’s global expansion, and was chosen as a key location for design and production of new small cars. Recently, Suzuki had chosen MUL for designing a new small car for its alliance partner Nissan Motor. But this is the first time that the firm has been involved in a venture for making two-wheeler parts. The firm is also part of a venture to locally manufacture diesel engines in India. This venture will supply diesel engines to a host of Suzuki operations across the globe.

To Summarize,

1. MUL and Japan’s Bellsonica coming together to produce critical components used in building Suzuki motorcycles and cars in India.

2. MUL will hold 30% in the JV which will be a core supplier to Suzuki’s automobile ventures in India, including MUL

3. The joint venture will be set up with an initial paid-up capital of Rs 12 crore or $ 3 million.

4. The move seen as an extension of MUL role as a core part of Suzuki’s global expansion plans.

It was already announced that Nissan cars made at MUL will be exported to Europe and other advanced countries. Later on domestic marketing will be studied and if possible implemented. In addition to this the above mentioned announcement of car parts, 2 wheelers is on the anvil. The infrastructure in India, cost competitiveness of resources including talented Human Resources, Software skills and availability of land for industrial purposes and other favorable factors including government encouragement make India an ideal place for such manufacturing activities. No doubt it will be a global hub for many industrial and IT ventures.

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