Maruti Suzuki sees full output at Manesar soon

Maruti had shut the Manesar plant, following a workers unrest that left a general manager dead and 96 supervisors and managers injured, many having fractures. Production resumed on August 21, under heavy security.

The company restarted operations at Manesar producing 100 vehicles a day. Currently it is producing 400-500 units per day, Shashank Srivastava, Maruti Suzuki's executive director-international operations, told CNBC-TV18 on Friday. Before the strike, the company used to produce around 1,700 vehicles per day at Manesar.

The Manesar plant is extremely important for Maruti Suzuki as it produces the hatchback Swift and DZire compact sedan, both among the top selling cars in the industry. Maruti Suzuki also produces the small car A-Star at Manesar, which is also exported in several global markets.

Srivastava said there was some blip in exports due to the plant closure last month, but the company still maintains its earlier target to ship 1.25 lakh vehicles this financial year.

Maruti's exports to Europe were hit following the end of the scrappage incentives a couple of years ago, and there continues to be a pressure on sales amid the debt crisis in the Euro zone. However, Srivastava said the company was seeing good growth in exports to Africa and Latin America.

In the domestic market, meanwhile, he expects pressure on petrol vehicles to continue. Sales of petrol vehicles have been hit over the last one year, due to a sharp rise in petrol prices and expensive loans. There are reports that oil marketing companies will announce another round of petrol price hike later on Friday.

Sales of Maruti's petrol powered 800, A-Star, Alto and WagonR were down 41% to 22,062 units in August. Companies have been offering discounts on petrol cars to boost demand. Srivastava said the discounts are likely to stay at 4.5-5% of ex-showroom price.

While petrol car sales have slowed, demand for diesel vehicles has jumped. He said, diesel vehicles now account for 55-56% of the total market, compared with 40% a year ago. Maruti too has seen strong demand for the diesel variants of Swift, DZire and the new Ertiga MUV, which was launched in April.

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee.

Q: Can you just take us through the pace at which the ramp up is happening at Manesar? By when do you expect to hit peak production again?

A: Last Tuesday, we started the production again in Manesar. We have started one shift operations. We will quickly ramp it up to the normal levels. Maybe it will take a little bit of time. I don’t really know the exact time schedule, but the start has been pretty good.