Maruti Suzuki Unfazed By Rising Competition

Country's largest carmaker Maruti Suzuki (MSIL) made it clear that it is not worried about competition which is expected to come from new players entering domestic passenger vehicle market. Continuing the momentum, the carmaker expects a 10 per cent growth in FY2018.

RC Bhargava, Chairman, Maruti Suzuki said, "It doesn't make a big difference whether there are 17 or 19 players. The market will only become a little more competitive than what it used to be."

Maruti said this when Kia Motors, a sister concern of Korean auto giant Hyundai Motor signed a memorandum of understating (MoU) with the Andhra government for setting up a greenfield automobile manufacturing facility in the state.

Kia Motors will invest about Rs 12,800 crore to set up the facility.

Bhargava said that the market has all the potential to sell 7-8-10 million cars per annum in coming years and there is enough space for them to justify their decision to enter the domestic market.

"There is a lot of cars. Where would you have these many cars," the chairman said post announcing MSIL's Q4 earnings.

Maruti Suzuki's net profit rose 16 per cent to Rs 1,709 crore for the fourth quarter ended March 2017 driven by higher sales of premium models.

The company's net sales grew 20 per cent to Rs 18,005 crore for the quarter compared with the year-ago period. For the full year, the revenue growth was 18.5 per cent and net profit increased by about 37 per cent to Rs 7,337 crore.

In the recently concluded the financial year 2016-17, when total PV sales touched 3 million units for the first time, Maruti Suzuki nearly sold half of them.

Bhargava personally thinks that the company will add another 1.5 million units in its annual sales in less than 10 years and for that the company needs to speed up its sales and service network.

The company having a cash reserve of Rs 22,000 crore has kept aside Rs 4,500 crore for this year's capex. The company will spend Rs 700-1000 crore on R&D and will be flexible on building sales and service network.

"This (capex) includes a certain provision for land but this can change depending on the progress made. There will be no monetary restrictions on implementing the programme for building the sales and service network," Bhargava said.

As far as the Gujarat plant is concerned, the company will start producing 10,000 cars (Baleno model) a month from May onwards to cut down the high waiting period of the car.