Maruti Suzuki earmarks Rs 10,000 crore capex for FY 2024-25

India’s largest carmaker, has reaffirmed its earlier plans to spend around Rs 1.25 lakh crore till 2030-31 in order to enhance its product range to 28 models and expand its total production capacity to 4 million units per annum by 2030-31

Maruti Suzuki India has lined up Rs 10,000 crore capital expenditure for various initiatives, including new product launches and capacity expansion, for the current financial year, according to a senior company official.

The country's top carmaker, which had earmarked around Rs 6,800 crore in FY24, currently produces 2.35 million units per annum split across its manufacturing plants at Gurgaon and Manesar in Haryana and Hansalpur in Gujarat. Its total production also includes the facility that it took over from Suzuki Motor Gujarat (SMG), which has an annual output of about 750,000 units per annum.

“In FY 23-24, our capex stood at around Rs 6,800 crore, majority of which was towards the Kharkhoda plant and the rest being on new product development and other maintenance activities. For FY 24-25, the planned capex is approximately Rs 10,000 crore," Rahul Bharti, Head -Corporate Affairs and Chief Investor Relations officer, Maruti Suzuki told Moneycontrol.

He stated that the bulk of the capex  is being earmarked for the company's first production line at its plant at Kharkoda, Haryana. The greenfield facility in Haryana, which will be operational by 2025, will have an initial production capacity of 2.5 lakh cars per annum.

It may be recalled that the Maruti Suzuki's board approved the issue of shares on a preferential basis to Suzuki Motor Corporation (SMC) as consideration for the acquisition of 100 percent stake in SMG. After the acquisition, Suzuki Motor Gujarat (SMG) became a wholly-owned subsidiary of the company.

In a related development, the carmaker has reaffirmed its earlier plans to spend around Rs 1.25 lakh crore till 2030-31 to enhance its product range to 28 models and expand its total production capacity to 4 million units per annum by 2030-31. This is in addition to the regular capex in the existing plants at Gurgaon, Manesar and Gujarat.

Out of the Rs 1.25 lakh crore earmarked, they would be deploying about Rs 45,000 crore to create a capacity of two million units. Notably, this calculation is based on current costs and a small amount for cost escalation.

"Funds would be needed for creating the sales, service and spare parts infrastructure to almost double domestic sale volumes. The infrastructure for exporting the much larger volume of cars will also have to be strengthened. The conversion of production lines to have greater flexibility will need additional capex,” the company stated in its presentation to shareholders, analysts and proxy advisors in October last year.

Maruti also communicated to shareholders that R&D will need additional outlays to enable most of the development work relating to Internal Combustion Engine (ICE) cars. “Capex will be needed to develop 10-11 new models, with different fuel options in this period. Production of EVs and SUVs will also need larger capex," it had stated earlier during the presentation.