Maruti Suzuki India to Invest INR 3,000 Crores in Fiscal Year 2012-13

Maruti Suzuki recently announced that they would be making an investment of around INR 3,000 crores in the fiscal year 2012-13 on different areas, including launches of new models and expanding capacity.

The company is currently making an investment of about INR 4,000 crores in this fiscal year primarily for opening new lines of assembling in their Manesar facility, R&D, launches of new models and marketing.

Ajay Seth, the company’s chief financial officer said that for the next fiscal year, their capex plan is for making an investment of about INR 3,000 crores. They will invest on R&D, marketing activities, launches of new models, and expanding their production capacities.

The company will make an investment of around INR 4,000 crores for this fiscal year, in different activities. He also added that out of this investment, one third would be spent in the next fiscal year.

Maruti Suzuki India plans on opening 2 new facilities inside Manesar that will have an annual production capacity of 2.5 lakhs. Each of the plants will receive an investment of about INR 3,625 crores. Of the two proposed plants, the first one is likely to begin functioning this year between September to October, whereas the other plant is scheduled to begin operations in the fiscal year 2012-13.

The company managed to produce close to 9.5 lakh vehicles from their manufacturing facility in Gurgaon, and around 3.5 lakh vehicles from their current manufacturing facility in Manesar in the fiscal year 2010-11.

Apart from this, the company is also planning to make an investment of INR 2,500 crores for building their K series engine manufacturing facility and for opening a new dedicated R&D plant located at Rohtak, Haryana. The company used up 0.7% of their net sales on research and development activities during the period of April to June 2011, in comparison the 1.1% they spent in the fiscal year 2010-11, according to Seth.

Following increasing demands for diesel powered variants in the Indian auto market, with the price of petrol skyrocketing, and the gap between diesel and petrol prices widening, Maruti is increasing production capacity of their diesel cars from the current 2.4 lakh vehicles per annum to 2.9 lakh vehicles per annum. It sells diesel variants of the Ritz and Swift hatchback and the sedans SX4 and DZiRE.

Seth said that the sales of diesel powered cars have seen an increase of 60 to 80% following petrol’s de-regulation. He added that sales of diesel cars contributed a total of 21% to the company’s overall sales in the Q1, in comparison 19% that was accounted by sales of diesel cars in the same period a year ago.

Maruti will also be increasing the production capacity of diesel engines from the current 2.4 lakh models to 3 lakh models per annum. Diesel engines are manufactured by a separate company at the manufacturing facility in Manesar, Suzuki Powertrain India.

According to Seth, the present import content of the company is around 15%, which they plan to decrease by 2 to 3% a year till the next fiscal year. The company also reported their net profits today, which saw an increase of 18.02% for the Q1 ended last month. They posted a net profit of INR 549.23 crores, in comparison to the INR 465.36 crores it recorded in the corresponding quarter in the last fiscal.

The company’s overall income from their operations during this quarter was INR 8,529.30 crores, in comparison to the INR 8,309.18 crores, it recorded in the corresponding period in the previous fiscal year, a growth of 2.65%.

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