Facing 'small delay' in finalising site for new 10-lakh units plant: Maruti Suzuki Chairman

Maruti Suzuki AGM: Maruti Suzuki India is facing "a small delay" in finalising the site to set up a new plant with an annual capacity of 10 lakh units although the upcoming plant at Kharkhoda in Haryana is on track to start production by 2025-26, company Chairman RC Bhargava said on Tuesday.

Addressing shareholders at the company's annual general meeting, Bhargava also reiterated Maruti Suzuki's belief that low-cost and small cars are necessary in India's economic and social conditions and a temporary setback in demand is not going to change its strategy, while hoping that small car demand will revive in the next two years.

"Our programme for expanding production is proceeding as scheduled, cars produced in the Kharkhoda plant will add to our sales in FY25-26. A small delay has taken place in finalising the site for a new one million unit expansion. We are making our best efforts to come to a quick decision in this matter," Bhargava said.

In January this year at the Vibrant Gujarat Global Summit, Suzuki Motor Corporation President Toshihiro Suzuki had announced that the company's Indian arm Maruti Suzuki India (MSI) will invest Rs 35,000 crore to set up its second manufacturing facility in Gujarat with an installed production capacity of 10 lakh units per annum.

In 2022, the company announced the setting up of a new plant at Kharkhoda with an installed peak capacity of 10 lakh units per annum at an investment of Rs 18,000 crore. This is the company's third plant in Haryana.

On entry-level cars, he said, "We firmly believe that low-cost and small cars are necessary in our economic and social conditions. A temporary setback in demand is not going to change our strategy."

He further said, "We are waiting that in the next year (or) two years, the small car market will revive...I think the nation has a need for small cars, and we are waiting, maybe by the end of FY25-26 we should have this (demand)coming back."

There is a large segment of people at the lower end, who are still scooter owners and want a safer and convenient means of transport in the harsh weather variations that are experienced in the country, Bhargava said.

India "cannot just do with larger, more luxurious vehicles" he asserted, adding the company is further strengthening its sales and service network in rural areas and small towns "so that the benefits of the Maruti service are not limited to people only in the bigger towns".

Responding to queries on the company's EV programme, he said by FY30-31 six EV models are expected. The first EV model will go into production and sale in a few months time and will be exported to Europe and Japan.

Bhargava reiterated that MSI is totally committed to a cleaner environment and carbon neutrality and the company has broadened its approach to achieve these goals by not only learning from what other countries are doing but also looking at what would be best in the interest of the specific resources and challenges of India.

"Electric vehicles are likely to be adopted gradually over the years as the multiple challenges facing the consumers are overcome. There can be little doubt that during the period this is happening, all other vehicles also need to become cleaner so that the carbon emission and other environmentally degrading pollutants are minimised," he asserted.

Along with Suzuki in Japan, he told the shareholders, "We are reviewing how best to strengthen and accelerate the development of new technologies and products. It is apparent that your company has to make special efforts to enhance capabilities in this area, and along with the know-how from Japan, increase our capabilities to better meet customer needs."

In response to a query from a shareholder on companies like Tata Motors and Mahindra opposing hybrid cars, Bhargava said, "I have been repeating this frequently that hybrid car is not a vehicle which is in conflict with electric vehicles."

Hybrid cars are essentially required to reduce the pollution and the oil consumption of vehicles, which are not electric vehicles, and there's a huge market out there for every single EV that can be produced and which meets with the customer requirements, he added.

Earlier, Bhargava asserted that the company's effort has always been to keep the customer, and society as its focal point and has worked with the government to understand the larger national goals and objectives and have built that into its policies and strategies.

"We have never let short-term benefits come in the way of proposing actions that would benefit both the society and our company in the longer term," he noted.

On-demand from shareholders for bonus shares and stock split, he said, "Quite honestly, it's difficult to find a really good reason how this will help the company or shareholders in improving our competitiveness or improving our profitability or improving any aspect of working of the company but as soon as we can find some reason for doing this, certainly we will look at it"

Outlining the company's roadmap, Bhargava said in seven years the company wants to get up to approximately 4 million (units) production, add six EV models, and increase exports to 7.5-8 lakh units annually by FY30-31, up from an expected 3 lakh units this fiscal.