Maruti Suzuki India Limited (MSIL), India’s largest automaker, is considering a short-term increase in capacity at its plant in Manesar, Haryana, to meet demand, the company says in its quarterly call on results. The ramp-up – which could be achieved by April 2024 – is expected to serve as an interim measure until its new facility in Kharkhoda, near Sonipat, is ready for production. The company has a combined capacity of 22.5 lakh units from its facilities in Haryana and Gujarat. It manufactured about 31%, or 1,62,000 units, from the Gujarat plant – owned directly by Suzuki Motor Corporation in Japan – this quarter.
“Most likely, we may need to add around a lakh of short-term capacity at Manesar to meet intermediate demand. Manesar one lakh could arrive by April 24 and Kharkhoda the following year,” says Rahul Bharti, General Manager (Corporate Planning and Government Affairs). According to him, the first manufacturing facility at the Kharkhoda plant is expected to have a capacity of 2.5 lakh units per year. MSIL is currently rolling out MPVs like the XL6 and Ertiga from its Gurugram plant, and models in all segments, such as Alto, S-Presso, Celerio, Brezza and Dzire, from the Manesar plant. .
Bharti also denied any claims about the cut in production at the Gurugram plant, which is also the automaker’s oldest facility. “We are not considering any kind of reduction in Gurgaon, in fact, at least in the short term, we may have to increase production in Gurgaon. Our first plant (in Kharkhoda) is expected to be commissioned by the first quarter of the year. calendar year ’25 And I think we already have to start thinking about the second plant if demand growth continues in India,” he explains.
MSIL is looking to pull out all the stops to meet its huge order book of 4.1 lakh, as of September. “Most of the time we’ve seen that Ertiga has a long waiting list and anecdotally you keep getting requests for early allocation. Of course the new models that we discussed, the Baleno has also a high number, and then the other models split mostly evenly,” Bharti says. Its backlog of CNG vehicles is around 1,30,000 to 1,40,000 units. However, the company flagged the substantial rise in CNG prices as a headwind. “Fortunately the price increases have had no impact, but there is cause for concern, because of the high prices and we have spoken to the government about this.”
MSIL recently unveiled CNG variants of the Baleno and XL6, and according to Shashank Srivastava, general manager, marketing and sales, MSIL, the automaker would have introduced new models much sooner had they not been inundated with a substantial order book for CNG. “Our priority was to increase the supply of semiconductors for CNG and meet existing demand,” he said at a press conference after the company’s quarterly results. Meanwhile, Bharti says that this quarter, MSIL saw over 20% penetration. “But we are engaging with the government to get the price under control because it has nothing to do with the Indian cost. It’s only linked to a global index, which has a kind of force majeure situation,” he adds. -he.
The company also revealed that it plans to spend over ₹7,000 crore on capital expenditure this financial year. “This includes the Kharkhoda facilities where we have now started our construction work. And we will have to place orders with various suppliers. So this will be a major part of the capital expenditure. On top of that, all new launches models we make where we need to invest in tooling etc., I think that will be another big investment,” says Ajay Seth, CFO, MSIL.
Bharti also claims that the SUV segment contributes significantly to the company’s EBIT margin. “The biggest advantage is that it is a premium offering in the SUV space. And what excites us is that a good percentage of bookings are for the higher variants. both for the Grand Vitara and for the Brezza. So a very good percentage of reservations are coming from the higher or higher variants. So that’s positive. And once we have volumes and we are present in these segments, profit automatically follows,” he explains.
Still, Seth says that at this stage it’s difficult to comment on profitability, as the company is expanding its presence in the SUV market. “In the past, with the portfolio consisting of small cars and we were not present in the SUV segment, our profitability was reasonably good.” He also adds that MSIL’s profitability depends on a myriad of factors, which act in tandem with each other. “It’s a combination of what the market can absorb, where you can price your product, and also, when the product matures over a period of time and you locate and the costs come down, things change over that period. intermediate.”