Maruti Suzuki CFO Ajay Seth stated that Maruti Suzuki India plans to invest over Rs 7,000 crore this year on various initiatives, including the construction of its new plant in Haryana and new model launches.
The country’s largest automaker has already begun construction at the new facility in Sonipat district.
The Kharkhoda-based plant, the company’s third in the country, is expected to be operational by 2025, with a first-phase installed production capacity of 2.5 lakh units.
Maruti Suzuki India (MSI) currently has a combined annual production capacity of over 22 lakh units across its two manufacturing plants in Haryana and parent Suzuki Motor’s facility in Gujarat.
The two Haryana plants, Gurugram and Manesar, produce approximately 15.5 lakh units per year. The automaker announced in May that it would invest Rs 11,000 crore in the first phase of the Sonipat facility.
“We will be spending upwards of Rs 7,000 crore this year,” Seth said during an analyst call.
He elaborated on the investment plans, stating that the funds would be used for a variety of activities.
“We’ll have to place orders to various vendors (for the Sonipat plant). So, that will be one major portion of the capex,” Seth explained.
He went on to say: “Besides that, all the new model launches that we are doing where we have to have the investment on toolings, et cetera, I think that will be another large piece of capex. So, these are two areas where the capex will be maximum.” According to Seth, the capex would also be used for R&D and routine maintenance.
In response to a question about the current business outlook, Seth stated: “The electronics component shortages are still limiting our production volumes. In this quarter, the company could not produce 35,000 vehicles.” He added that the company’s production activities are hampered by a lack of visibility into the availability of electronic components.
“Our supply chain, engineering, production and sales teams are working towards maximising the production volume from available semiconductors. The supply situation of electronic components continues to remain unpredictable,” Seth stated.
He stated that at the end of the second quarter, the company’s pending customer orders totaled approximately 4.12 lakh vehicles, with newly launched models accounting for approximately 1.3 lakh pre-bookings.
Following the success of the Brezza and Grand Vitara, the company plans to introduce more SUV models, according to Seth.
“Going forward, the company will strive to further strengthen its SUV portfolio to dominate the SUV segment, just like all other segments,” he said.