Fiat India plans new rollouts, facility shift to Ranjangaon

Fiat India, the local subsidiary of Italian auto major Fiat, has drawn up a revival strategy, which includes fresh investments, relocation of manufacturing base from Kurla in Mumbai to Ranjangaon near Pune, and the launch of several new models in a year.

A top executive in the company told Business Standard that a proposal has been sent to the Turin headquarters and a decision will be taken within a month.

The proposal was sent at the behest of the new management of the Italian car maker which sees India and China as the future growth drivers for the company, and a key to revival of its global operation which is being restructured.

While he declined to give details of fresh investment plans, the executive said that Fiat India will launch two new compact 'B-segment' cars "" the new Palio which was unveiled recently, and the Punto, another small car on the 'world car' platform, a C-segment vehicle which will completely replace the existing C-segment offering Siena, as well as a high end car, the Alfa Romeo (to be imported as completely built units).

The two small cars and the C-segment vehicle will be produced at the Ranjangaon site where the Kurla unit will be relocated.

The idea is to derive cost benefits by taking advantage of tax sops available at Ranjangaon "" currently, apart from other high taxes, Fiat India pays 4 per cent octroi on vehicles made at Kurla.

The executive added that the new proposal envisages 100 per cent capacity utilisation at 60,000 cars a year as compared to 15,000 cars being produced currently.

"There may not be a change in the price of the Palio after the launch of the new version. But, of course, we are putting in efforts to make the Punto cheaper than the Palio," the source said, adding, that the Siena, which has not been able to make an impression with customers in India, will be discontinued and will be replaced by a new C-segment vehicle. All other vehicles, including the luxury sedan Alfa Romeo, will be imported.

The Ranjangaon site was acquired by Fiat in 1996-97 with the idea of developing a greenfield 'world car' project based on the famous '178' platform.

However, a slow growth in volumes and financial woes back home forced the company to remain confined to the Kurla factory.

Currently, the company manufactures the Palio and a small number of Siena at the Mumbai unit, which was acquired from the Doshis of Premier Automobiles, with whom Fiat set up the JV originally. Later, the Italian car maker upped its stake in the JV to have a complete management control.

The Maharashtra Industrial Development Corporation (MIDC), which had given land to Fiat in Ranjangaon to facilitate the company's 'world car' project, recently inquired about the status of the plant.

Fiat said that the site was being used for training purposes, though there was a proposal to shift production from Kurla to this site at a later date.

In January, Fiat India witnessed a 14.5 per cent decline in domestic sales to 867 units. The sagging volumes in India, despite an initial pick up when the Palio was launched two years ago, has had a negative impact on the company's balance sheet, as the company has huge accumulated losses.

But the company has received Rs 1,200 crore voluntary grant from the parent in the meanwhile, to stay afloat.