Yamaha to set up Rs.1,500 crore plant in Tamil Nadu

May 14th, 2012 - 6:17 pm ICT by IANS  

Chennai, May 14 (IANS) With demand for its premium bikes going up and sensing bigger opportunities, the India Yamaha Motor Pvt. Ltd. will be setting up here its largest plant in Asia at an outlay of Rs.1,500 crore to roll out scooters and motorcycles, a top company official said.

“This is in line with Yamaha Motor Company’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. We expect the industry to attain 20 million units level by 2016 when we are targeting to sell two million units and achieve 10 percent market share,” Hiroyuki Suzuki, chief executive officer and managing director, told reporters here Monday.

India Yamaha Motor - a joint venture between two Japanese companies the Yamaha Motor Company and the Mitsui & Co Ltd - signed a Memorandum of Understanding (MoU) with the Tamil Nadu government for construction of the new plant.

Construction work at the new plant is expected to start this September and the plant would go on stream in 2014 with an initial capacity of 400,000 units.

“The total investment for the first phase will be around 40-50 percent of the overall outlay planned (Rs.1,500 crore) for the Chennai plant,” Riuji Kawashima, deputy managing director said.

The capacity will be increased in stages to touch 1.8 million units annually by 2018 by which time India Yamaha Motor would have a total annual capacity of 2.8 million units.

“Out of this, we will export between 10-20 percent to ASEAN and other countries,” Kawashima said.

In 2011, the company exported 192,000 units out of India and hopes to maintain the same levels this year as well.

According to Kawashima, around seven component vendors from Japan are expected to locate their facilities at the vendor park located near by apart from other auto ancillary units.

“Currently out localisation levels are at 90 percent, and at Chennai plant it will be 95 percent. The investment by vendors will be around 30 percent of ours in Chennai,” he said.

India Yamaha Motor rolls out its motorcycles out of its Surajpur plant (capacity 600,000) in Uttar Pradesh.

The company is in the process of expanding the capacity there to one million units at an outlay of Rs.750 crore.

When queried about the variance in capital expenditure for its two projects (Rs.750 crore for increasing the capacity by 400,000 units at Uttar Pradesh and Rs.1,500 crore for 1.8 million units in Chennai), an official told IANS that the capex at Uttar Pradesh includes other logistics facilities.

Meanwhile, India Yamaha Motor will enter the growing scooters market with its product Ray later this year.

“It will be targeted at young women. The prototype of our scooter was showcased at the Auto Expo in New Delhi this year,” Roy Kurian, national business head (sales) said.

Though focused on deluxe and premium end of the domestic motorcycle segment now, Kurian did not discount the possibility of the company venturing into mass market segment given the company’s proposed annual production capacity of 2.8 million units by 2018.

Kurian said the company will be expanding its distribution network by 2014 by adding around 650 dealers, 1,000 Yamaha Bike Corners and 400 dealer branches.

Currently the company has 400 dealers and 400 Yamaha Bike Corners.

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