With its Gujarat plant slated to begin production towards the end of 2016-17, Maruti Suzuki is actively working on expanding and strengthening its distribution channel. It will focus on land acquisitions to set up its own regional offices, warehouses and transit vehicle parking stockyards. It is also identifying locations in metro and sub-metro cities to set up showrooms. Of the Rs 4,400 crore capex planned for 2016-17, the company has earmarked spending Rs 800 crore for investment in real estate in the country.
“There are couple of areas where we are planning to invest. We are setting up our own regional offices. So, we will be buying land for that. And apart from this, we are also identifying areas in the metros as well as sub-metros, where we can build showrooms,” the company management told analysts recently. “These showrooms can then be given to our dealers to operate. There may be some areas where the dealers may find lease rentals or even buying the land expensive. So, we are identifying strategically such locations and prioritising accordingly,” a top management executive said.
At present, Maruti has 16 regional offices, of which only about a quarter are owned by it while the rest are on leased properties. Accordingly, the setting up of company-owned offices as well as having showrooms on land owned by the company is aimed at saving rental outgo.
The regional transit vehicle parking stockyards are being set up to reduce transit time for vehicles from the manufacturing plants to various states. While two transit stockyards have become operational at Bengaluru and Nagpur each, other regions are now being explored. This is also in line with the plan of the firm to have 4,000 dealerships by 2020 while the production capacity will also sharply grow with the Gujarat plant beginning operations in early 2017. The firm is expecting an output of at least 10,000 units from the plant before the end of year 2016-17. The final capacity of the plant is expected to be 1.5 million units.
In 2015-16, Maruti saw its sales grow 10.6% to 14,29,248 units, of which 1,23,897 units were exported. Its net sales were also the highest at `56,350.4 crore during the year.