Maruti Suzuki earmarks capital investment of Rs 3,500 cr

Written by PTI | New Delhi | Updated: Jul 30 2013, 22:30pm hrs
Country's largest car-maker Maruti Suzuki India will make a capital investment of about Rs 3,500 crore this fiscal as it gears up to strengthen its market leadership. The company, which accounts for nearly 40 per cent of volumes of parent Suzuki Motor Corp, said it will now be responsible for the export markets of Africa, the Middle East and neighbouring countries of the group and would consider setting up plant overseas.

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"The capital investment proposed this year is approximately Rs 3,500 crore. And this will only increase as we go ahead," Maruti Suzuki India Chairman R C Bhargava said.

Addressing shareholders in the company's annual report for 2012-13, he said, the company was continuing with all its planned investments to increase production capacity and introduce new products from time to time. "Work on the Gujarat site has commenced and we expect to start production by the end of 2015-16. The Manesar 3rd line will be commissioned soon, as also Phase I of the diesel engine line in Gurgaon," Bhargava said. Stating that the company's R&D centre continues to develop, he further said: "We are also investing in strengthening our sales and service facilities all over the country."

Commenting on the export strategy, Bhargava said: "Suzuki Japan has decided that India will now be responsible for the export markets of Africa, the Middle East and our neighbouring countries. "MSI will have to ensure adequate sales and marketing arrangements in these countries with the help of Japan, he added.

"We also have to determine the products to be manufactured for these markets and, if necessary, establish assembly plants overseas. This decision will greatly help the growth of our exports," he said.

On the market conditions, Bhargava said despite being an election year when traditionally the governments in power are reluctant to introduce unpopular measures, he is hopeful that several reforms which the UPA government is promising, such as implementation of large infrastructure projects, to revive sentiments.

"If all these happen, I believe there will be a change in sentiment, and car buying may again pick up. The festive season is also not far away. We are hoping that with steps undertaken by the government, and our own efforts, we will lead a resurgence in the automobile industry," he said. Maruti Suzuki India is also continuing with the efforts to reduce costs, and localise inner parts. Quality improvement has also to be a priority, Bhargava added. "We believe that in the difficult times ahead, the company has to make greater efforts than ever before in these directions," he said. In 2012-13, the company's profits grew to Rs 2,392 crore from Rs 1,635 crore in the previous fiscal, while its sales volumes grew by 3.3 per cent to 11,71,434 units from 11,33,695 units in preceding year.

Bhargava said during 2012-13, following the increase in diesel prices and narrowing of the gap with petrol, the demand for diesel vehicles also started to fall."During the first three months of this year (2013-14), the industry recorded a fall of 10.4 per cent in passenger cars, while utility vehicles' demand grew by 5.2 per cent," he added. Expressing similar views, MSI Managing Director and CEO Kenichi Ayukawa said: "Though the Indian market has a great long term growth potential, in the current situation the market is not so strong. In the first quarter, there has been a decline of the overall Indian passenger vehicle sales by 7.2 per cent."

In such times, it is easy for people to be swept by low sentiment and not approach the situation as a winner, he said, however adding that MSI would "endeavour to break through the situation and achieve better than last year in every respect."