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Maruti Suzuki India to consider stock split

Country's largest carmaker set to ease supply constraints, says chairman R C Bhargava at the 35th AGM

Maruti Suzuki India to consider stock split

Ajay Modi
The country’s largest carmaker Maruti Suzuki may look at splitting the stock, following a recent sharp run in prices. 

At the company’s 35th annual general meeting, chairman R C Bhargava (pictured) said a proposal to this effect will be placed before the board for consideration. Bhargava was responding to a query from one of the shareholders.

The company’s stock has surged sharply in recent months, on improved profitability and double-digit growth in sales. It hit a new high of Rs 5,448.90 on the BSE in Thursday afternoon trade. With a market cap of over Rs 1.63 lakh crore, the company is valued more than the parent Suzuki Motor Corp.
 

Concerned over long waiting periods of the company’s new models – the hatchback Baleno and the compact sport utility vehicle Vitara Brezza - Bhargava said it is “not good for the future” of the market leader and efforts are being made to address the issue.

“Everybody in the company recognises this is not a happy situation. It causes not only considerable customer inconvenience but is not good for the future of the company. We have to create capacity, so that this kind of (demand-supply) mismatch doesn’t happen in the future,” he said.

He said while the company will ease supply constraints in top sellers like the Baleno and address the mismatch, cars for sale from the first phase of the new manufacturing facility in Gujarat will roll out by February 2017. 

With the new plant, the company will achieve its target of selling two million units by 2020, he added. This will be a 40 per cent increase over volumes in FY16. “This target is fully achievable with the initiatives taken by the company. Expansion of production is required,” he said.

Exports will be a key driver, going forward. “Baleno has increased our ability to sell cars in Europe and Japan. Exports will play an increasing role as we go forward,” he said.

Sales of Maruti Suzuki increased by 11.5 per cent in the domestic market to about 1.3 million units. Exports grew marginally by 1.8 per cent.

The company is looking to grow in double digits in the current financial year (FY17), on account of good monsoons, the goods and services tax being passed by Parliament and increase in wages of government employees.

He said the one big challenge the industry has faced recently is from the environment lobby, especially with regard to diesel vehicles. The auto industry, too, is concerned about air pollution, he said, but western remedies cannot be applied to problems in India. 

“The health problems we face are those caused by particulate matter of 2.5 and lower, and not mono-nitrogen oxides. The solutions being suggested will not deliver the results we want. All restrictions placed on vehicles will affect the industry but not lead to results we want. With government support, hopefully, it will be tackled in a much more logical fashion,” Bhargava said.

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First Published: Sep 09 2016 | 12:05 AM IST

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