Maruti Suzuki India the largest auto car maker has approved a contract manufacturing agreement to be signed with an arm of parent Suzuki Motor Corp for the upcoming plant in Gujarat. The agreement is proposed to be marked between Maruti Suzuki India and Suzuki Motor Gujarat, a completely subsidiary of SMC, which will implement the Gujarat project, subject to administrative and minority shareholder approvals. The board of directors of the company at its meeting held on October 1st, 2015, has approved the contract manufacturing agreement and the lease deed proposed to be signed by the company with Suzuki Motor Gujarat.
The agreement shall continue for a time of 15 years to be extended for a further time of 15 years at the end of the initial period. After the expiry of a total time, MSIL and SMG might commonly discuss and agree to expand the time of this agreement. MSI had at first wanted to set up another plant in Gujarat, to take care of developing demand. A year ago, Suzuki Motor Corporation reported that it would contribute USD 488 million to assemble the Gujarat plant.
The Gujarat plant is imagined to have an aggregate installed capacity of 7.5 lakh units every year. It is required to be operational by May 2017. Gurgaon and Manesar offices have an aggregate production capacity of 1.5 million units every year. Under the new agreement, SMG might work on a no-profit no-loss method, manufacture and sell the products to MSIL in request from Maruti.