Maruti Suzuki's capital expenditure will rise 41 per cent to about Rs 4,100 crore in 2012-13. The country's largest carmaker is expanding diesel engine capacity, apart from building a new assembly line and strengthening research capabilities.
At the board meeting on Saturday, the company finalised Rs 1,700-crore investment for doubling the diesel engine capacity at its Gurgaon facility to six lakh units by 2014. Of this, Rs 950 crore is being invested for the first phase of 1.5 lakh diesel engines by mid-2013.
While these engines are made under licence from Fiat, Maruti is also sourcing around one lakh additional diesel power plants from the Italian carmaker's unit near Pune this year. This will help meet the sharp rise in demand for diesel models such as the Swift and the Dzire.
Asked if Maruti will also develop its own diesel engines, Mr R.C. Bhargava, Chairman, said, “It depends on what the Government's long-term policy on fuel pricing is. If the market becomes largely diesel-oriented in the long-term, we will need different diesel engines as well (apart from the sole 1.3 litre variant it uses across models).”
A widening price gap of diesel against petrol fuel has led to 35 per cent higher diesel car sales in 2011-12 and a 15 per cent drop in petrol car sales. While 57 per cent cars sold in the country are diesel, for Maruti this is lower at 30 per cent because of the limited availability of such models.
“Of our 13 lakh petrol engine capacity, 40 per cent is unutilised,” said Mr M.M. Singh, Managing Executive Officer for Production, adding that the total engine capacity is 17.89 lakh units at present(with joint venture firm Suzuki Powertrain).
Gurgaon to Gujarat
While Maruti will increase annual car production capacity at its second Manesar facility to 8 lakh units with a third plant by August 2013, it will reduce the capacity to about 5-6 lakh units by 2014-15 (from 8.5 lakh units) at its original Gurgaon facility.
This is being done to “reduce congestion as moving cars and trailer (trucks) is becoming a problem in Gurgaon,” which has turned into a residential hub, Mr Bhargava said.
Car production from Gurgaon will progressively shift to both Manesar and a new 1,200-acre planned facility at Gujarat. “Before June, we will announce when we will start work at Gujarat. The land deal will be completed in 6-8 weeks,” Mr Bhargava said.