DNA reported that a distinct downturn in the commercial vehicle market and the tight liquidity situation have forced Caparo India to defer it plans in the luxury bus segment.

As per report, Swraj Paul’s company had signed a technical agreement with Hyundai Motor Co in April 2007 for setting up a bus plant near Chennai with the total project cost at INR 500 crore. Production was slated to begin by the March quarter of this fiscal and in the first phase, INR 140 crore of investment would have been pumped in. But with the current economic downturn, the project has been put on hold.

Mr Uttam Bose CEO of Caparo India said that “The time is not right for such a project and we are putting it on hold.”

He said that the 30 member team recruited for this project will continue to work with the company and the 110 acre plot of land for the plant has already been acquired. He added that of the INR 140 crore Phase I investment, a large portion has already been invested by Caparo in the form of equity.

Mr Bose said that “Mr Angad Paul chairman of Caparo and myself are in South Korea next week for a meeting with the Hyundai Motor president. We will discuss various options. Hyundai has already been told that the project is on hold.”

The report added that the plant was to produce buses with greater stability during high speed cruising, as also quieter. The buses were to be fitted with fuel efficient Euro III/IV engines, air wide suspension and ABS systems. Hyundai would have been instrumental in providing Caparo with technology to make these buses compliant with current and future emission norms.

The USD 1.5 billion Caparo Group operates from over 50 sites in the UK, India, the US, Spain and Poland. The group’s business interests span steel manufacturing, automotive and engineered products and private equity investment.