Suzuki Motor Corporation (SMC) of Japan, a parent company of Maruti Suzuki, is planning to invest Rs 18,500 crore, for setting up a new factory in Gujarat.

The new plant will have a capacity of 1.5 million units per year; the same as the total capacity of its existing plants at Manesar and Gurgaon in Haryana. The proposed investment will be funded with the company’s equity and accumulated depreciation.

Suzuki Motor will set up a 100 per cent subsidiary, Suzuki Motor Gujarat, to make cars on a no-loss, no-profit basis for Maruti Suzuki. It intends to fund this expansion with its own equity and accumulated depreciation.

The company has put on record that Suzuki Motor Gujarat (SMG) will not generate any profits or losses at the end of a financial year. If any profit or interest is generated, it will be utilised in reducing the prices of the products to be supplied to MSIL during the following financial year. Similarly, if there is a loss at SMG, it will be compensated by an increase in sale price to MSIL during the next financial year.

SMG shall continue to supply spare parts for the model of any vehicle even after MSIL officially decides to discontinue production of such a model. The definite date of the discontinuance of supply of the spare parts shall be separately negotiated and agreed between the parties.