IPO-bound Hyundai India to pump in Rs 32,000 crore, raise capacity to 1.1 million units

(L to R) Wangdo Hur, Chief Financial Officer & Whole Time Director, Unsoo Kim, Managing Director, Limited and Tarun Garg, Chief Operating Officer & Whole Time Director, from Hyundai Motor India Limited

Hyundai Motor India Ltd (HMIL), which is on course to get listed on the Indian stock exchanges on October 22, has earmarked Rs 32,000 crore for the country between 2023 and 2032 as part of its growth strategy. The Indian arm of the South Korean carmaker will be making investments towards capacity expansion, product and platform development, and new launches. The company is also gearing up to widen its footprint in the Battery Electric Vehicle (BEV) market.

“We entered into four memoranda of understanding with the Government of Tamil Nadu for our Chennai Manufacturing Plant and offer letters with the Government of Maharashtra for our Talegaon Manufacturing Plant, which is yet to commence operations, all of which involved investment commitments, aggregating to approximately Rs 320,000 million (Rs 32,000 crore),” the company’s Red Herring Prospectus (RHP) said.

Hyundai Motor India Managing Director and Chief Executive Officer Unsoo Kim had earlier revealed that the company will invest Rs 26,000 crore for Chennai Plant and Rs 6,000 crore for the Pune plant which will increase the company's overall capacity from 8,24,000 units per annum to 1.1 million units per annum by 2028. This will support volume growth through meeting current domestic and export demands, he had said.

“We have projected HMIL as the global hub of exports for emerging markets. Our efforts towards growth and expansion have resulted in industry leading margins and returns

“Our historical capital expenditures were, and we expect our future capital expenditures to be, primarily for the acquisition of plant, property and equipment and intangible assets in relation to new passenger vehicle model launches. In the three months ended June 30, 2024 and 2023 and in fiscals 2024, 2023 and 2022, our payment for acquisition of property, plant and equipment and intangible assets were Rs 5,590.72 million, Rs 5,355.84 million, Rs 32,462.08 million, Rs 22,609.82 million and Rs 12,649.79 million, respectively,” added the RHP.

Expansion plans

HMIL has set a production target of 775,000 units for 2024, up from 765,000 units in the previous year.  The Pune plant, scheduled for commissioning in the second half of 2025, will have a capacity of 170,000 units in the first phase. The output will be expanded by 80,000 units in the second phase, bringing the total capacity of the Pune facility to 250,000 units.

Apart from sharpening its focus on Sport Utility Vehicles (SUVs), Hyundai has also drawn up an EV strategy, with four battery-driven models lined up in the medium term.  These new models will span various segments, including a mass-market e-car, premium offerings, Inster EV (Punch EV rival), and an electric version of its bestselling Creta SUV.  Efforts are underway to localise the production of battery pack assemblies and powertrains for electric vehicles, as per the company.

Hyundai India registered a total income of Rs 71,302 crore for the fiscal year ended March 2024 and a profit of Rs 6,060 crore as against a total income of Rs 61,436 crore and profit of Rs 4,709 crore in FY2023, as per the prospectus.

IPO details

On October 9, Hyundai India announced that it will come out with the country’s largest initial public offering (IPO) of Rs 27,870 crore and has fixed a price band at Rs 1,865-1,960 per share for the same. The IPO will open for public subscription on October 15 and conclude on October 17. Anchor investors will bid on October 14.

The carmaker aims to Indianise itself by getting it listed on the stock market. As Hyundai Motor India Ltd (HMIL) COO Tarun Garg puts it, “This IPO gives us an opportunity to really pursue some global standards in terms of excellence, in terms of operations, in terms of governance. All these things are really working in favour of an IPO."
On Hyundai choosing the Indian arm for a public listing and not other countries, Garg said, "The brand Hyundai has really been accepted very well in India. We have been able to appeal to the Indian people generally. This is probably the right country to really go for the IPO."