Maruti Suzuki Invests ₹4,960 Cr in Gujarat for Massive Capacity Expansion

Maruti Suzuki India Limited announced Monday that its board has sanctioned a substantial Rs 4,960 crore investment to acquire land in Gujarat. This strategic move is part of an ambitious plan to significantly boost the automaker's vehicle production capacity.

The land will be secured at the Khoraj Industrial Estate from the Gujarat Industrial Development Corporation. The acquisition is earmarked to support the proposed addition of up to one million vehicles per year to Maruti Suzuki's manufacturing output. Specific timelines and the total capital expenditure for this phased expansion will be finalized later.

Capacity Constraints Addressed

This investment comes as Maruti Suzuki's existing manufacturing facilities are operating at their absolute limit. The company's plants in Gurugram, Manesar, Kharkhoda, and Hansalpur currently boast an installed capacity of approximately 2.4 million units annually, with a production capability reaching 2.6 million units. All available capacity is fully utilized.

Shares of Maruti Suzuki saw a minor dip of 0.7% to Rs 16381.80 in early trading on Monday.
The automaker's decision signals a proactive approach to securing future manufacturing space early on. This is crucial in a market characterized by strong demand where supply bottlenecks can rapidly lead to a loss of valuable market share.

The expansion's impetus stems from robust growth in market demand, inclusive of export requirements. Funding for the land acquisition, subsequent development, and preparatory work will be a hybrid model, drawing from both internal cash reserves and external borrowing.

Maruti Suzuki has cultivated a significant manufacturing presence in Gujarat over recent years. The state has proven instrumental for both domestic production needs and international sales. The addition of this new land parcel provides essential headroom for future growth, especially as existing facilities grapple with full capacity utilization.