Amidst mfg push, Maruti Suzuki plans ₹5,000 cr capex, new plant

Maruti Suzuki India (MSI), the country’s largest maker of passenger vehicles, has earmarked ₹5,000 crore for capital expenditures for various initiatives—which includes product launches—for the current financial year, according to Ajay Seth, the chief financial officer of Maruti Suzuki. “Capex of ₹5,000 crore is something that we've committed for this fiscal on various projects, including, the new model launches etc.,” he says in an analyst call. Seth also adds that the capital expenditure will be managed through internal accruals.

MSI had previously earmarked ₹4,500 crore for the previous financial year, and has recently been the centre of large-scale investments for manufacturing facilities. The company earlier said that it has completed the process of allotment of an 800 acres site at IMT Kharkhoda in Sonipat district with the Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDCL). It will also invest ₹11,000 crore in the first phase of a manufacturing plant. “The first plant with a manufacturing capacity of 250,000 vehicles per annum is expected to be commissioned within the year 2025 subject to administrative approvals. The site will have space for capacity expansion to include more manufacturing plants in the future,” the company said in a statement.

Dushyant Chautala, the deputy chief minister of Haryana, concurred with MSI on the timeline of the project. Addressing a public meeting organised at Kharkhoda's New Anaj Mandi, he said that Maruti Suzuki will manufacture its first vehicle from the Kharkhoda facility in 2025. “Maruti will make electric vehicles in 800 acres. About 11,000 youth will get employment in the Maruti industry,” he adds. Chautala also added that the mother plant of Maruti-Suzuki will be established in Kharkhoda—with the help of which many small industrial units will also be established.

In March, Suzuki Motor Corporation announced to invest ₹10,445 crore by 2026, for local manufacturing of Battery Electric Vehicles (BEV) and BEV batteries in Gujarat—with ₹7,300 crore for the construction of a battery plant and ₹3,100 crore for increasing production capacity for BEVs. The fact that SMC was going to invest directly in the project—via its wholly-owned subsidiary Suzuki Motor Gujarat (SMG) and not MSI—panicked shareholders, as it was speculated that the electric portfolio might not come in MSI’s fold—a move which could have devalued MSI’s stock. However, newly appointed MD & CEO, Hisashi Takeuchi, said that the company consciously invested in Gujarat because it wants the EV to do well both in domestic and international markets, and investing in Gujarat would mean proximity to a port.

MSI, the crown jewel of India’s automobile industry, has lost its once-coveted 50% market share in India’s passenger vehicle market—owing to Indian consumers’ shifting preference to buy utility vehicles, in particular SUVs. However, it is working to reclaim that share. “Of course, as a market leader, our target will be to be at 50% market share or more. There are several factors responsible for this, one the semiconductor shortage, with the three lakh pending orders if we service that then the numbers and market share would be much higher,” tells Rahul Bharti, executive director, corporate affairs at MSI.

The company, which has a market share of over 65% in the non-utility vehicle segments, has plans to launch multiple products to consolidate its position in the fast-growing utility segment. “In every segment other than SUV our market share has gone up. Whenever we launch SUVs, of course, the market share must improve,” Bharti adds.