Maruti aims to have a total production capacity of 40 lakh units annually by 2030-31, it said in a presentation to shareholders. MSI aims to continue regular capex in their existing plants located in Gurugram, Manesar, and Gujarat, which amounted to around Rs 7,500 crore in the fiscal year 2022-23.
The company said it requires approximately Rs 45,000 crore to create a production capacity of 20 lakh units. This estimate considers current costs with a minor allowance for potential cost increases.
Elaborating on the benefits of issuing shares on a preferential basis to Suzuki Motor Corporation (SMC) rather than utilising cash for the acquisition of Suzuki Motor Gujarat (SMG), the company said 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” it said.
R&D will need additional outlays to enable most of the development work relating to internal combustion engine (ICE) cars being done by the company, it added.They also mentioned plans to develop 10-11 new models with various fuel options during this period. The production of electric vehicles (EVs) and SUVs would require significant capital expenditures, it said.”Payout of over Rs 12,500 crore for SMC shares in SMG would, besides reducing profits, EPS and dividend payments, could also create a shortage of cash,” MSI said. In August, MSI’s board approved the issuance of shares on a preferential basis to SMC as part of the acquisition of a 100 per cent stake in SMG. Following this acquisition, SMG would become a wholly-owned subsidiary of the company.
Originally, the Gujarat plant was intended to be owned by MSI, but this plan was later changed when SMC announced its intention to invest USD 488 million in building the plant. This decision faced opposition from institutional investors, leading the company to seek minority shareholders’ approval for the matter.