[Aditya]

According to a Tamil Nadu government official, the Renault-Nissan alliance has announced that it will expand its manufacturing facility in the state. The company is planning to invest a sum of Rs. 5,000 crore for the expansion. Construction has already begun and the timeline given to the company is seven years.



Renault-Nissan has already signed a Memorandum of Understanding (MOU) with the state government for Rs. 4,500 crore and the investment of Rs. 5,000 crore will be in addition to that. The company has plans to roll out various models under the Renault, Nissan and Datsun brands. The expansion will help the manufacturer in increasing its production capacity to meet demand.

Another carmaker investing in Tamil Nadu is Mahindra. The utility vehicle major has acquired 450 acres of land and is setting up a new facility with an investment of Rs. 4,000 crore. Tyre manufacturer MRF, is also investing Rs. 4,500 crore in setting up a new plant over the next seven years.

Source: DNA

[SmartCat]

When a car company invests Rs. 5,000 crores in setting up a factory, am I right in assuming that majority of that investment goes into purchasing capital goods (machinery, dies, robots, paint booths, assembly lines)? Which is almost always 100% imported?

I think the number of jobs created via direct and indirect employment gives a better picture of how a factory will contribute positively to the state's economy.

[Rajeevraj]

Since they hardly sell significant numbers in India, I assume their current capacity is good enough to take care of any future spike in demand for their cars (unlikely). So wonder what is the focus of such a big investment. Are they also big on exports like VW/Ford?

[Gannu_1]

Originally Posted by Rajeevraj

Are they also big on exports like VW/Ford?

In 2014, Nissan was the second largest exporter from India, surpassing MSIL.

Originally Posted by ACI

The bigger news is that Nissan, a company that didn’t even feature in the top ten list of carmakers this year when it came to domestic sales, managed to knock Maruti Suzuki off the number two spot when it came to exports. It exported 1,16,314 vehicles (a 17.5 percent increase) in FY2013-14 – that’s more than three times the amount of cars it sold domestically!

Autocar India

Latest update on this front - Nissan Micra was the most exported car from India during FY 2014-15!

Originally Posted by ACP

Nissan’s Micra was India’s biggest model exported in 2014-15 with 76,120 units sold, followed by the Hyundai Grand i10 with 63,585 units and the Volkswagen Vento with 56,064 units sold.

Autocar Professional

[GTO]

Originally Posted by Rajeevraj

Since they hardly sell significant numbers in India, I assume their current capacity is good enough to take care of any future spike in demand for their cars (unlikely). So wonder what is the focus of such a big investment.

I'm wondering the same thing too.

Nissan has already invested Rs. 4,500 crore and has an annual production capacity of 4 lakh cars. Of that:

120,000: Exports (lets say 1.5 lakhs for the fiscal year just ended)
48,000: Nissan's local sales for FY 2014-15 (including Datsun)
43,000: Renault's local sales for FY 2014-15

They still have lots of excess capacity.

I don't think the DNA article is correct, and C V Sankar (additional chief secretary) has been misquoted. Nissan said last year they're adding 20% more capacity, which would come up to 500 crores. Therefore, 5000 crore = 4500 crore (already invested) + 500 crore (expansion).

[aniketi]

This is really suprising news after the last news to cut off 3000 employees.

Renault-Nissan, which began its passenger car project in Tamil Nadu a few years ago, may be closer to making another large investment after the Franco-Japanese alliance and the state government sorted out tax refund issues.

The state government, preparing for its first global investor summit, is targeting a second deal with the car maker soon.Renault-Nissan is expected to sign a memorandum of understanding with the Tamil Nadu government for an investment of Rs 4,200 crore, according to people aware of the developments.

The alliance manufactures a range of passenger cars including the top-selling Renault Duster at the 640-acre factory. It will soon start making the Kwid, a sub-Rs 4 lakh car, at the plant. The company has invested about Rs 4,500 crore over the past seven years.

A top state government official said differences over the quantum of value-added tax and central sales tax refunds have been resolved after over a year of consultations with the company. "We have begun releasing assimilated arrears. As of now, Rs 600 crore of the outstanding Rs 1,900 crore have been given back and more will come in subsequent months. Now that this issue is behind us, we are certainly doing our best to sign the second MoU," said the state government official.

Nissan said in a statement to ET that it is in discussions with the Tamil Nadu government. "We will not be commenting on the details of any talks. India is a major market for us and we are committed to growing our presence," a Nissan India spokesperson said. "Any announcement on further investment will be made in due course." Renault-Nissan started investing in Tamil Nadu in 2008 after the state government unveiled incentives for automobile projects with investments exceeding Rs 4,000 crore. The benefits included land at concessional price, exemption from stamp duty and electricity tax, dual feeder power lines and refund of output value-added tax and central sales tax. The cap on refunds were made as high as 115% of the eligible investments made by the manufacturer over seven years.

State government officials said they expect the Global Investor Meet slated for September 9 and 10 in Chennai to trigger further investments. Chief Minister J Jayalalithaa is said to be hands-on regarding the progress of the dialogue with the industry. Top bureaucrats and officials are getting down to brass tacks utilising opportunities like CII conferences and meetings with company representatives to ensure maximum yields.

Read more: http://economictimes.indiatimes.com/...w/48798063.cms

[hybridpetrol]

Interesting! From the company side, they seem to be tight-lipped, and the details would be out in a few days any way, if there is any fresh investment.
If they are putting in so much investment after having a lot of unsold inventory, they better have a good strategy on where to spend the money!