Maruti mulls capacity expansion at Manesar

Maruti Suzuki India's chairman RC Bhargava on Wednesday said the country's largest car company is considering increasing the production capacity at its Manesar facility, and a decision on this is likely in a day or two.

The company would decide on increasing the capacity and investment needed for the same in presence of its parent Suzuki Motor Corporation's Chairman Osamu Suzuki, who has come to India to attend the company's annual general meeting.

Last week, Bhargava said the company would have discussions with Suzuki on a range of issues such as further investment in the country, ramping up production capacity and handling the European export market.

The Manesar facility of the company, which manufactures A-Star, SX4, Swift and Swift DZiRE, has a capacity of three lakh units a year and last month crossed five lakh units mark in production within 35 months of its commercial operations. MSI also has a diesel engine plant, located inside the Manesar facility, that produces 2.4 lakh units a year.

Speaking in the AGM, Bhargava said: "The worldwide recession which started in 2008 has taught us many lessons and also confirmed the validity of our strategies... we have weathered the recession much better than others."

"We are debt free and have a healthy cash balance. We have financed all growth from internal resources," Bhargava said. The company's efforts at cost cutting and improving productivity, even in the good times, helped in making 'reasonable' profits despite the impact of higher commodity prices and a weaker rupee, he added.

"We have recruited about 300 engineers in this period, all other reqruitments were stopped," he said. On MSI's R&D capabilities, Bhargava said, "With strong support from Suzuki, we are on course to develop our ability to design and manufacture small cars."

The company is investing up to Rs 1,500 crore (Rs 15 billion) in building test tracks and an R&D centre in Rohtak, Haryana. Earlier last week Bhargava said the company had planned to increase its exports over two-fold this fiscal to 1.5 lakh units from about 70,000 units during 2008-09.