Maruti Suzuki's second Gujarat plant to come up in Khoraj, board approves land acquisition to expand capacity

Maruti Suzuki plans to have a production capacity of approximately 4 million units in India by FY31.

• Maruti Suzuki to acquire land in Gujarat for new production facility.
• Board approves Rs 4,960 crore for land and preparatory work at Khoraj.
• New plant to boost capacity by 1 million units annually to meet demand.

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Maruti Suzuki India today said its board has approved the acquisition of land at Khoraj Industrial Estate in Gujarat's Gandhinagar district to expand production capacity.

The land will be acquired from Gujarat Industrial Development Corporation, according to a regulatory filing.

The approval comes at a time when the country's largest carmaker is operating at full capacity across its existing manufacturing network. Maruti Suzuki said its current installed capacity stands at around 2.4 million units per annum, with a capability to produce up to 2.6 million units annually.

This capacity is spread across manufacturing facilities in Gurugram, Manesar, Kharkhoda (all three in Haryana) and Hansalpur (Gujarat). The figure also includes production from the erstwhile Suzuki Motor Gujarat, which has since been amalgamated with Maruti Suzuki.

The company disclosed that the existing capacity is fully utilised, underlining the need for fresh investments to support future growth. Against this backdrop, the board has approved a proposed capacity addition of up to 1 million units per annum at the new location. However, the carmaker did not disclose the models that will be manufactured at the new facility.

Maruti Suzuki said the timeline for commissioning the additional capacity will be finalised later. The period within which the proposed capacity will be added will be approved by the board while framing the phased installation plan for the project.

The investment required for the capacity expansion, excluding land-related costs, will also be determined at a later stage. The company said this will be finalised and approved by the board alongside the phased rollout of capacity installation.

What has been approved at this stage is the cost related to land acquisition and preparatory work. The board has cleared an outlay of Rs 4,960 crore towards land acquisition, development and preparatory activities at the Khoraj Industrial Estate.

Maruti Suzuki said the proposed investment will be funded through a mix of internal accruals and external borrowings.

In its filing, the company cited growth in market demand, including exports, as the key rationale behind the proposed capacity expansion.

With India becoming the third-largest passenger vehicle (PV) market in the world, Maruti Suzuki plans to have a production capacity of approximately 4 million units in the country by FY31 to meet the growing demand.