MSIL to utilise capex from Guj plant for sales, R&D

The new company SMGPL would exclusively contract manufacture and sell vehicles to MSIL

With the Suzuki Motor's subsidiary now set to construct Maruti Suzuki's Gujarat plant, the latter will be utilising the saved capex on building its marketing-sales infrastructure, apart from its research and development facilities.

Recently, the country's largest car maker Maruti Suzuki India Limited (MSIL) announced that proposed new passenger car plant in Mandal region of Gujarat would be built by a subsidiary of its parent Suzuki Motor Corporation (SMC), instead of MSIL.   

The new company Suzuki Motor Gujarat Private Limited (SMGPL), which would be registered by April this year, would exclusively contract manufacture and sell vehicles to MSIL.

Speaking on the sidelines of the launch of its new car 'Celerio', MSIL's executive director Pankaj Narula said that the decision to lease out the Vithlapur land in Mehsana will help the latter in better utilisation of its capital expenditure.

"It gives us a lot of capex advantage. The money which we were going to invest in constructing the Gujarat plant will now be put in by Suzuki. Hence, we can now use our money for building infrastructure for sales and marketing, as well as invest in research and development (R&D)," said Narula.  Maruti Suzuki had earlier stated that the company was planning a capex of Rs 4000 crore for the Gujarat plant.

Due to its stake, the parent company Suzuki stands to earn 56.2 per cent of MSIL's sales in the country, including through the Mehsana plant.

Refusing to offer a segmentation on how the capex meant for the Gujarat plant will now be utilised, Narula said that the bulk of it would go in building its sales, service and marketing, along with R&D.  Narula added that the company has already invested around Rs 2000 crore in its R&D facility in Rohtak.