Maruti''s pockets get deeper: To inherit Rs7,200 crore from parent Suzuki for marketing and R&D

31 October 2007

Suzuki, in addition to an organisational overhaul, has also decided to infuse a humungous amount of cash, an additional Rs7,200 crore to be exact, to "upgrade" Maruti Suzuki''s operations in the country.

This cash inflow is in addition to the Rs9,000 crore earmarked earlier for the expansion of Maruti''s manufacturing facilities in India, which is key to helping the domestic car market leader get to its one million unit production ballpark by 2010.

The new infusion would reportedly be used to improve Maruti''s marketing and research facilities in India.

According to Suzuki Motor Corporation (SMC) chairman Osamu Suzuki, Maruti can ill-afford to continue to "work at the pace it has been working at till now", chiefly on account of increasing market shares of other global automakers'' in the Indian market. He says that the company needs to build spare parts depots, vehicle stockyards and display showrooms for the million units Maruti intends to produce in India starting 2010, and even the R&D and engineering functions need up gradation, including the installation of testing and product development facilities along the lines of what the parent company has in place on its home turf in Japan.

According to reports, Maruti''s new R&D centre would most probably come up in Haryana, close to the company''s flagship production facility, which also suggests that negotiations for a port facility to propel the company''s export fortunes are at an advanced stage.

According to Suzuki, all these steps, and the consequential cash infusion, are "aimed at maintaining Maruti''s lead here".