Business

Fiat to invest over Rs. 2,300 crore in Pune unit

— Photo: Paul Noronha

IN EXPANSION MODE: (From right) Vilasrao Deshmukh, Chief Minister of Maharashtra with Rajeev Kapoor, CEO, Ravi Kant, Chairman and Alfredo Altavilla, Vice-Chairman, Fiat India, at the signing of MoU with the State Government in Mumbai on Monday.

MUMBAI: Fiat India Automobiles will invest Rs. 2,341 crore more at its existing Ranjangaon facility in Pune to ramp up its capacity. With this investment, the company is taking the overall investment in Pune to Rs. 4,020 crore.

Fiat India is a 50:50 joint venture between Tata Motors and Fiat Group Automobiles.

Fiat India on Monday signed a Memorandum of Understanding with the Maharashtra Government for the investment.

“This is a watershed project because for the first time between Tata and Fiat such a deal is done anywhere in the world,” Tata Motors Managing Director Ravi Kant told reporters at the MoU signing ceremony. This is the 95th MoU signed by the Maharashtra Government, attracting an investment of Rs. 1,19,000 crore since June 2005.

Both players would invest Rs. 650 crore each and the balance would come from debt, Fiat India CEO Rajeev Kapoor said.

Fiat India plans to ramp up its operation to produce up to two lakh cars, three lakh engines and three lakh parts and accessories, according to a statement. At present, Fiat has a capacity to make one lakh cars and two lakh engines. At full capacity, the Ranjangaon unit is expected to employ 4,000 people.

Maharashtra is a power deficit State. However for this project, the Government has promised uninterrupted power supply.

The Ranjangaon facility is shared by the Tatas and Fiat to make cars, engines and transmissions.

At present, the Tatas are not using the facility to make their cars. The Tatas plan to use this facility from 2009 onwards.

Fiat would launch cars, Linea and Gande Punto, in this calendar year from the Pune facility. At present, Fiat makes Palio Stile 1.1 and 1.6 models from Ranjangaon.

Tata Motors has formed a team to look into ways of cutting the cost of its Rs. 1 lakh car, Nano. “We have formed a team. The input costs have gone up,” Mr. Ravi Kant said.

Bookings for Nano are expected to start three-months from now.

As part of Phase I, Tata Motors would manufacture 2.5 lakh Nanos and in Phase II it would ramp up its facility in Singur to one lakh more.

Mr. Ravi Kant ruled out the possibility of Nano being made in the Ranjangaon factory.

At Pune, the Tatas and Fiat have 50:50 joint venture manufacturing plant. — PTI

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