Maruti Suzuki confirms Rs. 3500 crore capital investment for fiscal 2014

Maruti Suzuki confirms Rs. 3500 crore capital investment for fiscal 2014 New Maruti Suzuki
author image CarTrade Editorial Team
Wednesday 31 July 2013, 11:53 AM

Maruti Suzuki India Limited has announced a capital investment of Rs. 3500 crore for the fiscal year 2013-2014. Industry experts feel that this move of the country's largest passenger car maker is likely to further strengthen its position as a market leader. The Indian subsidiary has a 40 per cent share, in terms of volume, in Suzuki Motor Corporation, the parent company of Maruti Suzuki.

Maruti Suzuki confirms Rs. 3500 crore capital investment for fiscal 2014

Besides, the auto maker confirmed that it is thinking about setting up a new plant overseas and would also be controlling exports to African and Middle Eastern countries. On this development, a company official said, “Suzuki Japan has decided that India will now be responsible for the export markets of Africa, the Middle East and our neighbouring countries."

R C Bhargava, the chairman of Maruti Suzuki India, spoke about the company's future plans. “The capital investment proposed this year is approximately Rs. 3,500 crore. And this will only increase as we go ahead,” he explained. Bhargava was addressing shareholders during the presentation of the company's annual report for 2012-2013. Aimed at increasing productivity and timely introduction of new cars, the firm is likely to continue with its planned investments.

Adding further, Bhargava, said, "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." Maruti Suzuki India is working on the development of its Research and Development centres along with strengthening facilities for sales and services across India.

With respect to exports, the chairman explained that Maruti Suzuki would be required to ensure sufficient sales and marketing structures in targeted regions with the assistance of Japan. "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," said Bhargava.

Since 2014 is going to be an election year, it is likely to make an impact on the firm's operations. Traditionally, the ruling government is reluctant to take steps that would damage its reputation. However, sources say that the company is positive about the promises made by the UPA government in terms of reforms and execution of huge infrastructure projects. In the firm's view, these changes could be crucial in changing the present scenario and help the market to gain momentum. Also, the company is banking on a combination of government policies, its own efforts and the beckoning festive season to mark the revival of Indian car market.

Industry experts feel that it is necessary for auto makers to take an initiative during such scenarios in order to improve the condition. In recent times, the rise in fuel prices has contributed tot he decline of cars, diesel models in particular. According to statistics, during the first quarter of 2013-2014, Indian auto market recorded a drop of 10.4 per cent in the demand for passenger cars.

Managing Director and Chief Executive Officer of Maruti Suzuki India, Kenichi Ayukawa, spoke about the current situation and future prospects. “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,” he explained.

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