Japanese two-wheeler giant Yamaha today said it would set up third facility in India, entailing an investment of Rs 1,500 crore over the next five years.
The company's wholly-owned subsidiary — India Yamaha Motor (IYM) — will start the production of this new plant near Chennai by 2014 with an initial annual capacity of 4 lakh units, which will be expanded to 18 lakh units by 2018.
"India Yamaha Motor signed a Memorandum of Understanding with the government of Tamil Nadu today approving the construction and operation of a new two-wheeler factory in the state," the company said in a statement.
The facility will be located at the industrial park in Vallam Vadagal on outskirts of Chennai and the construction is scheduled to begin in September 2012, it added.
"The forecast for the total investment in the new factory and facilities is approximately Rs 1,500 crore over the next five years," IYM said.
The company had earlier said it was scouting for land in South India, preferably with port facility, to make the country an independent export unit for selling in overseas markets, including Latin America and Africa.
As per plans, the new plant will initially employ 1,800 people and have an annual production capacity of 4 lakh units.
"Production capacity will then be increased in stages to a level of 18 lakh units annually by 2018, at which time employment is expected to reach 6,500 people," it said.
IYM has two manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Haryana. While the Surajpur plant produces motorcycles for both domestic and export markets, the Faridabad unit makes two-wheeler parts.
"To keep pace with the growth in demand, plans have been implemented to boost the existing factory's annual production capacity of 6 lakh units to 10 lakh units on an investment of approximately Rs 750 crore in 2012," IYM said.
By 2018, the company will have a combined production capacity of 28 lakh units.
"We are very pleased with this development as this is in line with YMC's medium-term management plans of enhancing local production levels to meet the demand growth in emerging markets such as India and their export markets," IYM Chief Executive Officer and MD Hiroyuki Suzuki said.
The Indian two-wheeler market has witnessed robust growth in the last few years and IYM expects it to attain 2 crore units level by 2016, when the company is targeting to sell 20 lakh units and achieve 10 market share, he added.
