Maruti Suzuki's Rs. 24,000cr plant will produce 10L cars annually
What's the story
India's largest carmaker Maruti Suzuki has some lofty investment plans. The company is working on setting up a new production factory, which can make up to 10 lakh cars per year.
The plant is expected to cost around Rs. 24,000 crore. The new facility will be in addition to the plant being set up in Kharkhoda in Haryana.
Context
Why does this story matter?
Maruti Suzuki's plan to invest in another plant while working on the Kharkhoda plant is interesting. It is a testament to the company's belief that demand will rise.
The new decision comes against the backdrop of another successful quarter for the company. Strong demand for passenger cars was the driving force behind the firm's performance in the last quarter.
New plant
The new plant will have good port connectivity
The automaker's new plant will be outside Haryana. The company plans to set it up at a location with good port connectivity to make exports easy.
"The work on the new plant will be carried on simultaneously with Kharkhoda," said RC Bhargava, chairman of Maruti Suzuki.
"Kharkhoda is, of course, ahead of the new plant, wherever it will be," he added.
Approval
Maruti's board has approved the plant in principle
The groundwork for the plant will happen in early 2024. The company's board has approved the new facility in principle.
However, the location is yet to be finalized. The new project will be funded by internal accruals.
The upcoming factory will be the automaker's fifth site in India. Others are in Manesar, Gurugram, Kharkhoda, and Suzuki's facility in Gujarat.
Official words
The company will need more vehicles to meet demand: Bhargava
Bhargava said, "...looking at the market size for the next 8 years, even if we utilize the one million potential of the Kharkhoda plant, we will still need more vehicles to meet the domestic and export demand."
"The new plant will be expanded in a phased manner depending on the market demand," the chairman added.
Kharkhonda
Maruti will invest Rs. 18,000 core in the Kharkhoda factory
The first phase of the 800-acre Kharkhoda plant will be commissioned by 2025. The Rs. 18,000 crore factory will have a peak production capacity of 10 lakh units.
The company plans to achieve that in the next eight years. In the first phase, the facility will produce 2.5 lakh cars.
The second phase of the factory will begin in the latter part of 2026.