Capacity addition in Gujarat on track despite drab market: Maruti Suzuki

Third line to be commissioned by April 2020, additional 250,000 cars a year to be rolled out

Despite a dull market outlook, the third line of auto major Maruti Suzuki's Gujarat plant will be commissioned by April 2020, said Maruti Suzuki India Ltd. chairman R C Bhargava.

"We will still go ahead with the third line. You have to take a calculative risk. It is better to have a little bit excess capacity than lesser capacity," said Bhargava in Ahmedabad on Friday, ahead of the foundation stone-laying ceremony of MSIL's hospital and school projects in Sitapur. 

SMC's 100 per cent subsidiary Suzuki Motor Gujarat Pvt Ltd has set up the Gujarat plant in the Mandal-Becharaji region of Mehsana, where passenger cars will be produced for Maruti Suzuki India Ltd.

According to Bhargava, while the second line of 250,000 cars per annum was commissioned in January this year, the full capacity of 500,000 from the two existing lines will be achieved this year. The plant currently manufactures Baleno and Swift models for Maruti Suzuki.

However, despite offering a lower guidance for the new fiscal 2019-20, Bhargava said a third line would be commissioned without delay. When in full capacity with the third line being added, the Gujarat plant can manufacture 750,000 cars per annum eventually.

On the issue of shifting MSIL's Gurugram plant, Bhargava said that the move was being made to increase capacity and reduce costs, though an alternative location was yet to be finalised. "The intention, however, is to be in Haryana," he said.

Commenting on the potential uptick in demand post Lok Sabha elections, Bhargava expressed concern over factors like US sanctions on Iran for oil, implementation of BS-VI norms and other safety regulations. "If these were not there, I would have said demand will pick up," Bhargava said.

The company is investing around Rs 125 crore for a 100-bed hospital in collaboration with Zydus Hospitals and a school with Podar Group which will come up in phased manner.