Maruti Suzuki to invest ₹45,000 cr to double capacity in next eight years: Chairman Bhargava

Maruti Suzuki India Limited, the country’s largest automobile manufacturer, is planning to invest ₹45,000 crore to double its capacity to additional two million cars by FY31, chairman R C Bhargava told shareholders on Tuesday. The development comes months after the company's announcement of doubling its production capacity from two million cars at present to four million cars by FY31.

"The era ahead of us is going to be a very uncertain era and a very challenging era. Putting up these 2 million cars itself will cost us something close to ₹45,000 crores. It depends on how inflation goes up. At the moment we estimate it costs around ₹45,000 crores for 2 million cars. We will need to put in more investments in our marketing and sales which we have been doing over the last eight, or nine years. So, we increase our capacity to sell and service cars from the current 2 million to 4 million cars," says Bhargava.

As the company veers to the competitive automobile market, it plans to introduce more models in electric vehicles, hybrid vehicles, CNG (compressed natural gas) vehicles and ethanol-using vehicles. The company plans to launch 10 new models by FY31, of which six will be electric vehicles. The first electric vehicle by the company is slated to be launched in FY25. Bhargava acknowledged that Maruti Suzuki is trailing behind its peers in the electric vehicle segment. "While we are behind some companies in launching EVs in the market, but it doesn’t mean that we are late in the market. When we are coming in FY25, we will have in any way damaged our ability to get an adequate market share. We have carefully accessed the environmental collective ratios in India and what has now been planned for production for FY25, will give us a good position in the market," says Bhargava, adding that the company is working with other technologies as well.

Bhargava earlier said that the EV models will comprise 15-20% of the company’s total sales by FY31.

According to Bhargava, the company’s strength lies in other technologies such as strong hybrid, CNG and ethanol. "We already have two hybrid vehicles in the market. We are by far the leaders in CNG vehicles in the market. Our market share of CNG is somewhere around 25% or 30% and nobody’s close to that. Our vehicles are modified to meet ethanol20 norms," says Bhargava.

"The alliance which Toyota has with Suzuki Japan, gives us access to all kinds of new technologies including areas in hybrids and hydrogen and other areas," adds Bhargava.

In terms of exports, Bhargava expects the company's exports to reach around 8,00,000 cars by FY31. "The volume of exports we expect to have by 2030-31 is maybe around 800,000 cars. And this is a different order than what we receive today.  A lot of infrastructure and support services will be needed to fulfil this demand, and all of this is going to require a lot of investment," says Bhargava.

According to Bhargava, Maruti Suzuki has the highest P-E ratio in the world at about 30. "Despite the cash reserve that we have built, the PE ratio of Maruti is 30. Others are 12 and below. Our PE ratio in 2013-14 was 19. It has gone up from 19 to 30. So, accumulating cash has not been a bad thing for shareholders," says Bhargava.