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M&M mulls investment of $684 million in new plant in India

Snapshot: The company hopes that that Narendra Modi-led government kick-starts the sluggish economy and brings reforms to the auto industry.

Auto major, Mahindra & Mahindra Ltd have announced that the company is planning to infuse an investment of about Rs 40 billion or 684 million USD in a new factory. The said move is being planned in anticipation of new model launches and an anticipated pick-up in sales. 

Mr Pawan Goenka, president of Mahindra’s automotive and farm equipment sectors said that the proposed new plant is expected to have a capacity of 4,00,000 units per annum and a formal announcement regarding its development will 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," Goenka said. "We have new products being launched starting about a year from now, and for the new products we need new capacity." he further added. In addition, the Indian automaker is also examining an alternative option of expanding the present company plant in Chakan near Pune. 

Mahindra & Mahindra Ltd have earmarked around 100 bullion rupees that will be infused 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. 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. 

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