Mumbai: Mahindra & Mahindra, India’s largest utility vehicles and tractor maker, is investing Rs5,000 crore ($1.1 billion) on Phase 1 of its new plant in Chakan near the Pune, a senior official said on Saturday.

Half of the Rs5,000 crore has already been invested and the remainder would come over the next 3-4 years, bringing the plant’s capacity to 300,000 units, Automotive Sector president Pawan Goenka told reporters after inaugurating the plant.

The company has not decided on approval for a second phase, which would take a further 3 years and would raise the plant’s capacity by another 250,000 units, Goenka said.

The new plant has already started rolling out its new mini truck Maxximo, launched earlier this year. Medium and heavy trucks from its joint venture with US-based truck and engine maker Navistar will also roll out from this plant, followed by variants of the Xylo, and its new premium sport utility vehicle scheduled to be launched in 2011, Goenka said.

The Scorpio pick-up truck, to be launched in the US this year, will come from its existing plant in Nashik, in Maharashtra.

“Once Phase II is also completed this plant will be enough to serve the needs of Mahindra for at least 10 years,” Goenka said.

In the initial phase the new unit, with four assembly lines, will be making 250,000 utility vehicles and 50,000 trucks.

The project would be funded through a combination of equity and debt provided by the parent company and several of its units, Goenka said.

Goenka, who is also head of the Society of Indian Automobile Manufacturers, said that compliance with Euro III emission norms could not take place for at least 3-4 months since the fuel for this is not available.

He also said the Society is in talks with the government to delay compliance with Euro IV norms until the required fuel is available in the 13 cities which will be affected.

The original deadline for the new emission norms was 1 April.