Mahindra to set up plant near Chennai

Decision comes weeks after the company pulls out of a joint venture with Renault and Nissan for a facility there.

Weeks after opting out of a proposed joint venture with Renault and Nissan Motor for a manufacturing facility at Chennai, utility vehicle maker Mahindra & Mahindra has decided to set up its own plant near the south Indian city.

M&M pulled out of the deal earlier this year and subsequently announced it was setting up a greenfield plant at Chakan, near Pune, with an estimated investment of Rs 1,500 crore, to produce 300,000 vehicles.

Commercial production at Chakan is expected to start in two years, about the same time Renault and Nissan will launch production at the Chennai unit.

Pawan Goenka, president (automotive sector), M&M, told Business Standard that the company is committed to invest in the south, where a new plant will be set up near Chennai. He said company executives were in talks with the Tamil Nadu government on the deal. Plans for the Chennai plant are being finalised and work is likely to begin in 2010.

"We have several business interests in Chennai. Mahindra as a group is very interested in Tamil Nadu. We want to look at Tamil Nadu for the next major expansion of our automotive business," Goenka said.

M&M, Renault and Nissan had in February last year announced plans to set up a plant with an investment of Rs 4,500 crore, to produce 4,00,000 vehicles a year for the three companies.

Goenka said that the plan was reviewed and the company decided to opt out after deciding to set up its own plant at Chakan. On Monday, M&M signed an agreement with the Maharashtra government for the Chakan unit and announced it would invest Rs 4,000 crore in the project.

The plant will make trucks for M&M's venture with Navistar Inc's International Truck & Engine unit and will also have a powertrain facility.

Despite opting out of the manufacturing JV with Renault and Nissan, M&M will continue to sell Renault products, Goenka said.

This will be through the Mahindra Renault JV which makes Logan models at the Nashik plant. Other Renault products on the Logan platform will also be sold through this JV company in the years ahead.

New utility vehicle to cost Rs 4-5 lakh

M&M plans to roll out a five-seater mass market utility vehicle (UV) next year. It would be priced between Rs 4-5 lakh.

The new mass market UV, which has been developed at a cost of Rs 500-600 crore, would not be a trimmed down variant of any of the company's existing models, but one designed and developed from scratch.

The prototype of the model is ready and is expected to be sent for homologation (for safety and emission clearances) by end of this year.

Discussing M&M's product plans for the next three to four years, Pawan Goenka, president (automotive sector), said that an all-new sports utility vehicle was also being developed and that this will be launched in 2010.

The new SUV will be first rolled out from the company's proposed plant in Chakan, near Pune.

Goenka said that while the new mass market UV will meet safety and emission norms, the compelling price will be its USP. The current year will see the launch of the much-awaited UV Ingenio.