Maruti Suzuki, one of India’s car manufacturers has announced its intention to invest Rs 45,000 crore in expanding its production capacity. The company aims to double its production to four million units by 2031. Chairman RC Bhargava highlighted the importance of utilizing their cash reserves in achieving this goal. Additionally, Maruti Suzuki is contemplating a stock split proposal. Is exploring the possibility of acquiring Suzuki Motor Gujarat to enhance efficiency.
Maruti Suzuki, the largest car manufacturer in the country, has set its sights on a substantial investment of approximately Rs 45,000 crore. This financial endeavor is aimed at achieving the ambitious goal of doubling its production capacity to a remarkable four million units annually by the close of the current decade.
The company’s chairman, RC Bhargava, articulated this strategic vision during the annual general meeting on Tuesday. He emphasized that Maruti Suzuki will make judicious use of its substantial cash reserves to facilitate this expansion and expects to realize this enhanced capacity by 2031.
The initial coverage of the company’s investment intentions was reported by the media on May 11. Furthermore, Bhargava confirmed that the company is open to considering a stock split, an idea proposed by its shareholders, which would subsequently be presented to the board for assessment and deliberation.
In addressing the shareholders, Bhargava highlighted the significant milestone of achieving a production and sales figure of two million units over the course of four decades. He then unveiled the company’s forthcoming plans, outlining the ambition to replicate this feat within the following eight years.
This strategic phase aims not only to double production capacity but also to augment sales and overall turnover. Bhargava’s perspective on this journey was previously shared in the company’s annual report, where he categorized the phases of the company’s growth and evolution, notably from a public enterprise to its current stature as a prominent player in the global car market.
Bhargava underscored the present era’s challenges, particularly with the global push for carbon neutrality. He emphasized the need to embrace multiple technologies in the transition toward clean mobility. In light of this evolving landscape, he advocated for a structural reorganization within the company to align with its future growth prospects.
To this end, Maruti Suzuki is actively exploring the possibility of acquiring the manufacturing facility in Gujarat owned by its parent company, Suzuki Motor Corporation. This facility is responsible for producing between 800,000 to 900,000 vehicles annually. The proposed integration of Suzuki Motor Gujarat under unified management is expected to optimize production processes and efficiency as the company broadens its operational footprint.
Regarding the financial aspect of this ambitious endeavor, Bhargava estimated that establishing the capacity to manufacture two million cars alone would necessitate an investment of approximately Rs 45,000 crore. He acknowledged that this figure is subject to change based on inflation dynamics, but currently, it serves as a prudent estimate.
Turning to the matter of the suggested stock split, Bhargava committed to further discussion within the board. While acknowledging that such a split could enhance share trading accessibility due to the current share price being around Rs 10,000, he emphasized that, from a performance and shareholder return perspective, the division of shares might not yield a significant impact.
