Maruti Suzuki to Break Ground on Gujarat Plant Early Next Year

R.C. Bhargava, chairman of Maruti Suzuki India Ltd., said Friday that car sales in India will likely grow in single digits this financial year and the next due to the current slowdown in Asia’s third-biggest economy, as well as uncertainty over the pricing of diesel fuel and gasoline.

The Gujarat plant will be Maruti’s first outside the northern state of Haryana, where a July 18 riot by about 3,000 workers at its Manesar factory resulted in the death of a senior manager, injured more than 100 people and forced the company to suspend production.

The violence was the worst since the company began producing cars in 1983.

But Maruti executives say the plan to build the new plant in Gujarat isn’t linked to the labor unrest in Manesar.

Gujarat has a long coastline, and the new plant will enable the company to save on logistics costs in shipping its cars overseas, especially to Europe. Maruti exports its cars to more than 125 countries.

 “The Gujarat project is going along online. We hope that in the early part of next year, we should at least get the groundbreaking done in Gujarat,” Mr. Bhargava told reporters.

Maruti has acquired 700 acres for the third plant from the Gujarat government. It will initially have an annual capacity of 250,000 cars a year when it opens in the financial year starting April 1, 2015. The capacity could be increased to 2.0 million vehicles a year, Maruti has previously said.