Largest car manufacturer Maruti Suzuki India plans to invest over Rs 7,000 crore this year on various initiatives, including the construction work of its new plant in Haryana and new model launches, according to company CFO Ajay Seth. The country's largest carmaker has already commenced work at the new facility in the Sonipat district.
The Kharkhoda-based plant, the company's third set-up in the country, is expected to be operational by 2025 with an installed production capacity of 2.5 lakh units in the first phase.
Currently, Maruti Suzuki India (MSI) has a cumulative production capacity of over 22 lakh units per annum across its two manufacturing plants in Haryana and parent Suzuki Motor's facility in Gujarat.
The two plants in Haryana -- Gurugram and Manesar -- together roll out around 15.5 lakh units per annum. In May, the auto major announced to 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 in an analyst call.
Elaborating on the investment plans, he said the earmarked amount would cover various 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 noted.
He further said: "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." The capex would also go into other areas like R&D, the regular maintenance among others, Seth said.
On a query regarding the current business outlook, Seth said: "The electronics component shortages are still limiting our production volumes. In this quarter, the company could not produce 35,000 vehicles." Limited visibility on the availability of electronics components is a challenge in planning the company's production activities, he added.
"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 said that the company's pending customer orders stood at about 4.12 lakh vehicles at the end of the second quarter with recently launched models accounting for around 1.3 lakh pre-bookings. Having achieved success with both Brezza and Grand Vitara, the company aims to bring in more models in the SUV segment, Seth said.
"Going forward, the company will strive to further strengthen its SUV portfolio to dominate the SUV segment, just like all other segments," he said.