Maruti to invest Rs 9,000 cr more

Plans world class R&D, design facility, regional distribution centres and logistics support.

Maruti Suzuki India Limited (MSIL), the leading car maker in the country, will invest Rs 9,000 crore more in India, most of it in research and development (R&D), warehousing, marketing, logistics and design.

The company has already set aside a corpus of Rs 9,000 crore, which will be used primarily to augment production. Almost every second car sold in India is a Maruti vehicle.

The fresh investment will be made over a longer period, about eight years, as compared with three years for some earlier investments.

Shinzo Nakanishi, managing director and CEO, MSIL, said, "We will invest Rs 9,000 crore in India which will be over and above the earlier investment programme announced by the chairman (Osamu Suzuki) last year."

"The investment will cover our other round of expenses for setting up a world class R&D and design facility, improving warehousing facilities and marketing channels, upgrading our logistics support and similar ventures, which will improve the company's overall business presence in India," he said.

Delivery time
The company is planning to set up giant regional warehouses, which will cater to sectoral markets in each of the distribution zones.

This means that a Maruti dealer in Mumbai would not have to place the order for a particular model to the company's office at Gurgaon or Manesar, but he would be able to source the car model directly from the regional centre based somewhere in the western region. This will slash delivery time by 70-75 per cent.

Maruti is planning four or five regional centres (warehouses) in the next couple of years, in the eastern, western, southern and central areas of the country.

For example, it takes about a month or two for Swift, the company's top selling vehicle, to be handed over to the customer today. With regional warehouses in place, the delivery could achieved in less than 10 days.

Capacity constraints
The centralised and timely despatch of vehicles from its facilities in the north will mean faster shipment to overseas markets through the Mundra and Mumbai ports in western India.

"Company dealers cannot be expected to pour large sums of capital into enhancing showroom space to house more vehicles. Hence, we have decided to go ahead with the regional warehousing plan," a company executive explained.

Apart from launching new models by the end of this financial year, Maruti Suzuki expects to hit a production of 300,000 units from its Manesar plant alone in October, which would take its combined capacity up to 900,000 units. It will add another small car to its line-up, perhaps in 2008-09.

Faced with a production constraint, the company is unable to satisfy the current demand. Even though the Gurgaon plant is stretched beyond its original installed capacity of 500,000 units (it now produces 600,000 units), the Manesar plant produces just 130,000 units.