Calcutta, Dec. 30: Maruti Udyog is setting up an aluminium foundry in a joint venture with its parent Suzuki Motor Corporation of Japan at an initial investment of Rs 120 crore.
The project, to be completed in six to nine months, will have a capacity of 5300 tonnes per annum. Suzuki has already obtained the approval of the Foreign Investment Promotion Board for the investment.
Suzuki will hold 51 per cent in the aluminium project and manage it, while its Indian subsidiary Maruti will control the balance 49 per cent.
The foundry being set up in Manesar in Haryana will reduce input costs and help Maruti become more competitive.
Sources said the foundry would lead to annual savings of Rs 70 crore. At Maruti’s current level of production, this works out to a saving of around Rs 2000 per vehicle.
The plant will manufacture crankshafts, cylinder blocks for aluminium engines, all four wall cylinder heads and right side transmission cases for the Zen, Alto, Esteem and Wagon-R.
The unit will also lead to increase in local content in various Maruti models.
The transmission cases, for instance, will improve the local content in the gearboxes, much more than the current 60 per cent. And the over all localisation of content will go beyond 70 per cent on account of this project, sources said.
Going forward, the foundry would also produce two-wheeler components.
“The two-wheeler segment has been considered because Suzuki plans to set up a wholly-owned subsidiary (in India) to manufacture two and three-wheeler vehicles. That venture will increase the need for aluminium castings,” they said.
The two and three-wheeler project is expected to come up after the year 2004 when the cooling off period with the existing joint venture— TVS Suzuki — comes to an end.
The two-wheeler factory is expected to have an initial capacity of 50, 000 units, which will be stepped up once a distribution network is in place.