Maruti Suzuki shares tanks on concerns over Gujarat plant

Shares of Maruti Suzuki India Ltd (MSIL) on Friday plunged over 5 per cent on the bourses over investor concerns regarding its Gujarat plant.

Last month, Japan's Suzuki Motor Co (SMC) had said it will invest $488 million (about Rs 3,050 crore) in setting up a car factory in Gujarat by 2017, which was proposed by its subsidiary MSIL.

This had led to investor concerns related to pricing, funding of capacity expansion in the proposed contract manufacturing arrangement.

Shares of Maruti Suzuki plunged 5.33 per cent over its previous closing price to a low of Rs 1,573 on the BSE oon Friday.

Similar movement was seen on the National Stock Exchange as well, where the stock opened at Rs 1,664.05, then lost further ground and slumped 5.47 per cent to an early low of Rs 1,573 on NSE.

Commenting on the decline in the counter, market analysts said investors are still concerned about the impact of Maruti Suzuki's plan to source cars from a plant to be built by its parent Suzuki Motor Co.

MSIL in a regulatory filing yesterday said: "The Suzuki Motor Corporation's subsidiary in Gujarat would operate on the basis that while it would not make any losses, it would also not accumulate any cash surplus."

The plant, which would be the first fully-owned factory of the Japanese giant, would have an initial capacity of 100,000 cars a year, all of which would be supplied to MSIL, as per the plan.