Gujaratstartups: Hyundai Motors may be looking at Gujarat as a location for its next plant in India. The company already has two plants in Kanchipuram district, Tamil Nadu.

Three top Hyundai Motors officials are reliably learnt to have made a presentation on Thursday to top Gujarat Government officials who had come to Bangalore with their road show.

According to industry sources, Hyundai will require about 500 acres, and an additional 200-300 acres for vendors, for its third plant which may entail a direct investment of approximately Rs 4,000 crore.

It is learnt that the Gujarat Government is keen on getting Hyundai setting up its next plant in the State and has agreed in principle to provide the infrastructure support needed.

Hyundai Motors, which is trying to resolve labour issues at its two plants near Chennai, is conducting a feasibility study to decide on a location for its next plant. It is learnt that while it is not against setting up another plant in Tamil Nadu itself, or even in neighbouring Andhra Pradesh, Gujarat would offer the car-maker better access to markets in north and western India, sources in the industry said.

Also, there is proximity to ports for exports. Another factor that may favour Gujarat is that companies here are not mandated to recognise labour unions. Tamil Nadu, on the other hand, is mulling over enacting a law that requires companies to have a registered and recognised labour union as Maharashtra and West Bengal do.

The capacity at the existing plants running in three shifts currently is over 6 lakh units a year, and Hyundai has invested about Rs 9,000 crore in these units while the vendors have invested about Rs 4,000 crore. While Hyundai's employee strength is about 10,000, the vendor companies have created over 80,000 jobs.

Hyundai has about 20 per cent market share in the country and earns about $2 billion annually from exports. Incidentally, Hyundai is the largest exporter of cars from India.

Hyundai expects to decide on the plant location as well as capacity and investments within the next two quarters, as the new plant will take two years to go on stream.

However, the company is expected to decide on its new diesel engine plant in the next two months during which the feasibility study would be completed.

Source: The Hindu Business Line