India Yamaha Motor to invest Rs 1,500 crore in new two-wheeler plant in Chennai

MUMBAI: India Yamaha Motor Pvt Ltd. plans to invest Rs 1,500 crore in a new two wheeler plant in Chennai over the next five years. The company on Monday signed an MoU with with the government of Tamil Nadu approving the construction and operation of a new two-wheeler factory in the state. The plant will kickstart operation in the beginning of 2014 and have an initial capacity of 4,00,000 units employing 1,800 people. The company can eventually scale up the production to 1.8 million units in phases by 2018. This expansion is part of the company's plans to achieve 2 million vehicle sales by 2016. Hiroyuki Suzuki, CEO & MD, India Yamaha Motor said, "We are very pleased with this development as this is in line with YMC'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. The Indian two-wheeler industry has witnessed much growth in the last few years, attributable to increased disposable income levels among a rapidly expanding middle class. We expect the industry to attain 20 million units level by 2016 when we are targeting to sell 2 million units and achieve 10% market share." The company says, the aggressive introduction of new models in the 150cc+ deluxe & premium motorcycle segments have contributed to a strong growth in domestic sales and exports for India Yamaha Motor. Yamaha posted a 36% growth in 2011 by selling 5,20,000 units and for this year it is aiming at 23% growth and sell 6,40,000 units with an eventual goal of touching 1 million by 2013 and 2 million by 2016. To keep pace with this current growth in demand, plans have been implemented to boost the existing factory's annual production capacity of 600,000 units to One million units on an investment of approx. Rs 750 crore in 2012. With this new Chennai factory, India Yamaha Motor will have a combined two-wheeler production capacity of 2.8 million units by 2018. The new factory is to be constructed in Vallam Vadagal on the outskirts of the city of Chennai, Tamil Nadu with a total floor space of approx. 114,000 m2 and is scheduled to begin in September 2012.The new facility will join the currently operating factories of India Yamaha Motor Pvt. Ltd. (IYM) at Surajpur (UP) and Faridabad (Haryana) to meet the rising demand for two-wheelers in India. The new Chennai Factory will be the first in the Yamaha Motor group to have a "vendor park" in its nearby vicinity that will bring together the production operations of main external parts suppliers, thus enabling complete synchronization of external supplier parts production as well. This system will reduce losses in the areas of production management and distribution to extremely low levels in the overall engineering, manufacturing and marketing process, and make the new production base a highly efficient and profitable plant.