Expect double-digit growth; Rs 4,400 cr capex in FY17: Maruti

Buoyed by record sales in the previous fiscal, Maruti Suzuki India today said it expects to continue with the same momentum to clock a double-digit growth and has earmarked Rs 4,400-crore capex for 2016-17. The company, however, said the auto industry will be up against unfavourable conditions such as foreign exchange rate, increase in commodity prices and “environmental lobby” in the ongoing fiscal.

“We are taking forward Make in India programme with our manufacturing and we hope to grow in double digits in 2016-17.  We are again setting a target of repeating double-digit growth despite the many challenges in the way. It’s not going to be an easy year in any way,” Maruti Suzuki India Chairman R C Bhargava told reporter here.

He further said that all the positive factors including the softening of commodity prices and foreign exchange rates are not that positive now as they were earlier.

The company has been focussing on increasing its manufacturing activities, localisation through more vendors and would continue the same this fiscal, Bhargava said.

“However, it is not going to be easy as some of the favourable factors in the previous fiscal such as forex rate, and commodity prices are reversing this year,” Bhargava said, adding “we also have the environmental lobby which would like to stop or reduce our production of cars”.

In 2015-16, MSI posted 10.6 per cent increase in sales at 14,29,248 units, out of which 1,23,897 units were exported.  Its net sales were also the highest at Rs 56,350.4 crore, beating the previous best of Rs 48,606 crore in FY2014-15.

When asked about the capital expenditure plans of the company for the new fiscal, he said: “This year, we will be spending around Rs 4,400 crore. This will be mainly used for strengthening our R&D and building our marketing and sales infrastructure.”

Last fiscal, the company had spent Rs 2,500 crore on capex.

He said the company’s team for land acquisition is in place and already Rs 800 crore has been invested for expansion of its sales network.

Commenting on the company’s production plans, Bhargava said commencement of roll out of vehicles from the Gujarat plant has been advanced by five months.

“Originally, the Gujarat plant was scheduled to start production from May 2017 but we are likely to start from January 2017,” he said.

The production at Gujarat plant would begin from January and on a single-shift basis and the company is looking to churn out around 10,000 units from there in the current fiscal.

In the meantime, the company is working to stretch production at its two existing facilities in Gurgaon and Manesar to produce a total of around 1.57 million units a year.