HYDERABAD: Hyderabad-based MLR Motors Private Limited is setting up a Rs. 2,500-crore car manufacturing unit on the outskirts of Hyderabad and plans to roll out its entry-level diesel cars in 2009.

MLR Motors, which is headed by B. V. R. Subbu, former president of Hyundai Motor India Limited, will initially invest Rs. 1,250 crores in the car project. This will include an investment of Rs. 500 crores for expansion of the facilities in Lokesh Machines Limited (LML), a leading manufacturer of machine tools and automotive components, which has promoted the motor company.

Lokesh Machines Managing Director M. Lokeswara Rao told reporters here on Friday that the company was planning 900 cc and 1500 cc diesel variants initially and would go in for CNG and petrol variants later.

<137> Daewoo plant

<137>"Plans are afoot to use Daewoo's Surajpur plant partially to roll out the new cars," he pointed out. The defunct Daewoo plant has been recently acquired by Crosslinks, a company that has been promoted by Mr. Subbu and Mr. Ajay Singh of Spicejet. "We have refused the land offered by the Andhra Pradesh Government free of cost but we have paid handsome compensation to the displaced people to acquire land for the car project," Mr. Rao said, adding that the work would begin in April this year.

MLR Motors plans to manufacture most of the car's components, including the engine blocks and gearboxes at the 250-acre ancillary unit coming up near the State capital.

Shareholding pattern

Mr. Rao said he would hold 30 per cent share and Mr. Subbu 21 per cent. The remaining equity would come from private equity partners. He explained how the initial response to his plans to set up a car manufacturing plant was poor. "But in the last two months, 37 leading global design houses came to LML plant expressing their willingness to support the car project," he added. Asked how the proposed car would look, Mr Rao said it would be in tune with the market needs at the time of its launch in 2009. Quizzed further if it be like the Hyunda's Santro or Daewoo's Matiz, the LML chief said: "If our cars are like the two models, who will buy it. The cars will definitely be different."

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