In The News
27 May 2014

Mahindra considering $684 million investment in new India plant

MUMBAI: Mahindra and Mahindra Ltd is considering investing about 40 billion rupees ($684 million) in a new factory, a top executive said on Friday, as it readies new models for an anticipated pickup in sales.

Pawan Goenka, president of Mahindra's automotive and farm equipment sectors, said the proposed new plant would have capacity to make 400,000 vehicles annually, and an announcement on its development would be made "soon".

"We have been looking at this plant for some time and because of a slowdown in the industry it was delayed. And now we are close to making a decision," he said.

"We have new products being launched starting about a year from now, and for the new products we need new capacity."

The Wall Street Journal reported the plan late Thursday.

Goenka said another option on the table was expanding Mahindra's Chakan plant in western India.

The company, India's largest SUV maker, last year said it would invest 100 billion rupees over the next three years to increase production and boost research and development.

The landslide victory last week of the pro-business Bharatiya Janata Party in the general elections have further raised hopes among auto executives that the new government will initiate reforms to kick-start the Sluggish economy. 

Automakers in India have been battling two years of slumping sales as a slowing economy kept a lid on consumer spending, which was further burdened by high interest rates and fuel costs.

Hindu nationalist Narendra Modi's new government is expected to push ahead with major reforms to revive growth amid the country's worst economic slowdown since the 1980s.

"It is certainly giving a positive sentiment to the business industry right now, based on everything the new government is likely to put in place," Goenka said.

The company is expected to roll out two new compact SUVs in 2015.

Source: Economic Times