The Telegraph
Since 1st March, 1999
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Palio fuels Fiat new unit plan

Calcutta, Oct. 1: Fiat India, a subsidiary in which Italy’s Fiat holds a 97 per cent stake, is planning to set up another factory, this time in Maharashtra’s Ranjangaon, to raise the production of its popular Palio cars. The facility will be 400 kms from its Kurla plant, its solitary unit in India that can make 60,000 vehicles annually.

Sources say the company aims to sell 50,000 cars in the year ending December 31. “Given the strong response for Palio, we will not be able to cater to the rising demand with our existing capacity. We have thought about the project and a decision will be taken soon,” the sources said.

There was no word on how much the new unit will cost to build and the number of vehicles that it could make. “Since the plan is yet to be crystallised, the investment size is not known. But if the proposed plant is as big as the existing one, the investment may vary from Rs 1,500 crore to Rs 2,000 crore. Everything will depend on the demand pattern next year,” sources said.

The company has invested Rs 1,690 crore in its Kurla unit, which has 2,171 employees. It set up a research and development wing in Ranjangaon.

Having gone through a lean patch before Palio, its prima donna, was launched last year, Fiat now appears confident that its sales target will be surpassed comfortably despite the slump in the auto industry.

“We have sold 17,562 cars in April-August against 2,758 in the corresponding period last year. We are expecting good sales in the last quarter of the current fiscal year too,” they said. The company sold 29,310 vehicles in the first eight months ended August this year.

Since the automobile sales usually pick up from September every year, the company is confident of having its target fulfilled by December.

Aggressively priced, Palio has the biggest market in the western region, which accounts for around 40 per cent of its total sales. While sales from the southern region stand at 20 per cent, the northern and eastern regions contribute another 40 per cent to the overall sales.

The company is planning to add 10 dealers to its existing network of 66. “The drive is on to double the network over the next couple of years,” sources said.

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