Maruti Suzuki is working out a series of complex manoeuvres to build up capacities.
The company will shift production of some models from its Gurgaon facility to Manesar a few kilometres away, upgradeGurgaon and eventually add a new line at Manesar.
Though the company is mum about its total capacity by 2012 (by when the new Manesar line would have come up), de-bottlenecking at Gurgaon has already begun and would result in incremental production of 70,000-90,000 units by December this year, at an investment of Rs 150 crore.
The company will thus close 2009-10 with an annualised production capacity of just under 11 lakh vehicles on a two-shift basis.
Speaking during an analyst call on Saturday, managing director Shinzo Nakanishi said a decision on adding the new line at Manesar and subsequent investments would be taken at Maruti’s next board meeting.
“My personal estimate is that we will increase capacity by 1 lakh units in each of the first, second and third years. Maruti believes in a step-by-step approach,” he said.
But the big expansion will happen when the new Manesar line is ready. Typically, the addition of a new line involves investment of about Rs 1,500 crore for every 1 lakh units.
Maruti’s acknowledgement of capacity expansion comes when there is a large waiting period on many of its models such as the Swift, Dzire, Ritz and even A-Star.
Company officials said unprecedented festival demand has led to this backlog, but that this should “settle at 6-8 weeks for most of our cars. We don’t have any supply chain issues”.
On the exports front also, Maruti reported exceptional growth with 66,000 units during the first half of 2009-10. With the scrappage schemes across Europe over, it is now looking at non-European markets to keep up the export momentum.
Capacity expansion is also likely at Suzuki Powertrain India, the diesel engine manufacturing plant of Maruti, which can currently make 2 lakh engines per year.
Officials said the K-series engine manufacturing capacity would be doubled to 5 lakh units as more and more models are upgraded with this advanced engine series. At present, A-Star, Ritz and Estilo sport this engine.
The total capital expenditure in 2010-11 would be Rs 2,000 crore against Rs 2,100 crore this fiscal and this would largely be used on upgrading Gurgaon facility, the Rohtak R&D facility and new model launches.
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