M&M has started setting up the plant adjacent to its state-of-the-art factory for manufacturing Scorpio, its best selling car.
The plant will offer a stamping shop, a paint shop with a top quality pre-treatment and an assembly line specific for the low cost car Logan.
Sources from M&M informed that the car would have a localised content of 50 per cent from the start itself. M&M has also finalised vendors to outsource components for the Logan car.
With an aim to produce and commercialise the car developed by Renault, in the Indian market, M&M and Renault had recently signed an agreement for setting up a joint venture 'Mahindra Renault Ltd'.
M&M's stake in the venture will be 51 per cent, while Renault's stake will be 49 per cent. The plant, which is being set up at Nashik with an investment of Rs 700 crore (Rs 7 billion), will have a capacity to manufacture 50,000 cars per year.
Logan will be marketed under the brand name 'Mahindra Renault'. To distribute the car in India, M&M will be using its own network of dealership.
A right-hand drive version of the Logan will be developed to meet the needs of the Indian and other right-hand drive markets, a few of which are the United Kingdom, South Africa and Malaysia.
The car would have 50 per cent localised content from the beginning. M&M has also finalised its vendors to fulfil its needs of high quality components. This will definitely mushroom auto cluster in Nashik. This project will also provide about 1500 to 2000 jobs in the region, sources said.
After the Skoda plant in Aurangabad, Logan car plant at Nashik, is the second major auto investment in Maharashtra in the last four years.
The state has outmatched Uttaranchal and Andhra Pradesh in luring M&M for its Rs 700 crore (Rs 7 billion) project to manufacture the Logan. For that, the state has offered several sops to M&M under its mega project policy.
With an aim to develop auto clusters in the Nashik and Aurangabad regions, the Maharashtra state government has agreed to exempt M&M from payment of electricity duty and stamp duty.
The company would have to pay octroi, but at a lower rate. The Nashik Municipal Corporation has agreed to give octroi concession to M&M's Logan car plant. With an aim to lure such large investments in Nashik, the NMC administration has set up a special committee to chalk out octroi norms.