Maruti Suzuki lines up record capex of Rs 14k cr to add capacity

The two lines to be added at Kharkhoda Haryana and Hansalpur Gujarat, with a total production capacity of 5 lakh units annually, will help the company meet demand, especially for small cars, he said in an earnings call, while also ruling out any drastic impact on demand in India due to the West Asia war.

Car market leader Maruti Suzuki India has earmarked a record capital expenditure of Rs 14,000 crore for FY27, as it gears up to add capacity to meet rising demand, having reached 100 per cent capacity utilisation at its existing facilities, its Chairman R C Bhargava said on Tuesday. The two lines to be added at Kharkhoda (Haryana) and Hansalpur (Gujarat), with a total production capacity of 5 lakh units annually, will help the company meet demand, especially for small cars, he said in an earnings call, while also ruling out any drastic impact on demand in India due to the West Asia war. ''Capex for this year (FY27) is estimated to be around Rs 14,000 crore. As we have said, this is the highest in any of the past years. This higher capex is because we are continuing to install units in Kharkhoda. We are starting work on a new site in Gujarat, and therefore, the capex has gone up because of these new investments in manufacturing capacity,'' Bhargava said. He was responding to a query on the company's capex plans for 2026-27 and the growth outlook. Elaborating, Bhargava said, ''The growth is going to continue, because during this current year, there are going to be extra lines, which have been commissioned in Kharkhoda and in Hansalpur.'' These lines will have a combined full capacity of 5 lakh cars a year, he said, adding, ''Because they have just started production, the expectation is that during the year, these two lines will add roughly around 2.5 lakh cars to our production capacity this year''. The additional capacity would ''reflect what we can produce and sell in this year because even today, to reach our sales of 2.4 million or so, we are running virtually at 100 per cent, and we have a backlog, and we have very low inventories'', Bhargava said. ''We will see more small cars in the market as new capacity is added,'' he added. He further said, ''Our growth is now more or less determined by our ability to add capacity and to run. Of course, we run at 100 per cent (capacity).'' Maruti Suzuki India said in FY26, its sales were restricted by a limitation in the production capacity, with about 1.9 lakh pending customer orders at year end, including nearly 1.3 lakh orders in the small car segment of 18 per cent GST bracket. Besides, the dealer inventory was at a low of about 12 days' stock. Maruti Suzuki India currently operates four manufacturing facilities, one each in Gurugram, Manesar and Kharkhoda in Haryana, and Hansalpur in Gujarat. These facilities have a combined installed annual capacity of 24 lakh units. As part of its capacity expansion strategy, in March 2026, MSIL identified land for its fifth manufacturing facility at Khoraj Industrial Estate in Sanand, Gujarat. Once fully operational, this facility will have an annual production capacity of 10 lakh units. The company had said it will invest Rs 10,189 crore to set up 2.5 lakh production capacity in the first phase at its fifth plant. Sharing a longer-term outlook, Bhargava said, ''We are going to see in the next few years is (that) every year we will see growth happening in the car industry because of the fact that the demand has once again revived.'' The GST reforms, which the government brought about from September last year, have had a ''very, very big effect, not only on the automobile sector, but in many other sectors'', he noted. When asked about the future of small cars, Bhargava said, ''I think India is a country where small cars have a long-term future. A large part of the population in India, if they have to have decent mobility, (we) have to have low-cost small cars.'' Stating that India is not a rich country where everybody has a per capita income of USD 40,000 and everybody can buy big cars, he said, ''It is not happening, not in a long time.'' The government has also understood that ''affordability of small cars is a very real matter'', and the kind of situation of that this segment was hit in a manner that led to ''the sales dropping so drastically is not going to happen because the government realises that that is bad for a large number of people'', he said, while responding to possible impact on future regulations such as CAFE III norms on the segment. When asked about the impact of the West Asia war on car demand in India, Bhargava said there is uncertainty about the war itself and what will happen in the near future, but ''the net result is that there is minimal impact on the car market in India at present because of the war''. In terms of customer demand or ability to produce cars, nothing very adverse is happening, he said, adding, ''there is an issue of higher prices. There could be an issue of fuel prices going up. We don't know yet. It is all speculation, but other than that, there is nothing much to worry about.'' When asked about possible price hikes, Bhargava said the company will take a call at an appropriate time, noting that rising commodity prices have put pressure on the company's bottom line.