Maruti Suzuki India Ltd. announced a significant capacity expansion plan on Monday, with its board approving land acquisition worth ₹4,960 crore in Gujarat. The automaker's shares traded 1% lower following the announcement, despite strong annual performance gains.

Board Approval for Gujarat Land Acquisition

The company's board has given approval to acquire land for production capacity expansion at Khoraj Industrial Estate from Gujarat Industrial Development Corporation. The decision comes as Maruti Suzuki's existing manufacturing capacity is fully utilised across all operational facilities.

Current Production Capacity Overview

Maruti Suzuki operates with substantial manufacturing capabilities across multiple locations. The company's total existing capacity stands at around 24 lakh units per annum, distributed across facilities in Gurugram, Manesar, Kharkhoda and Hansalpur.

The enhanced production capability of 26 lakh units per annum includes units produced at Suzuki Motor Gujarat Pvt Ltd., which has been amalgamated with the company.

Expansion Strategy and Investment Details

The proposed capacity expansion of up to 1 million units reflects the company's response to growing market demand, including export requirements. The board will finalise and approve the specific capacity installation while framing the phases of implementation.

The ₹4,960 crore investment covers:

• Land acquisition costs
• Development activities
• Preparatory infrastructure work

Market Performance and Stock Movement

Shares of Maruti Suzuki India Ltd. were trading 1% lower at ₹16,345 apiece around 11 am on Monday following the expansion announcement. Despite the day's decline, the stock has demonstrated strong annual performance with gains of 42% over the past year, reflecting investor confidence in the company's growth trajectory.

Maruti Suzuki India Ltd. has received board approval for a significant expansion initiative in Gujarat, with the automotive giant set to invest ₹4,960 crores in land acquisition and development activities. The board meeting held on Monday greenlit the proposal to acquire land at Khoraj Industrial Estate from Gujarat Industrial Development Corporation for expanding manufacturing operations.

Expansion Details and Investment Breakdown

The approved expansion plan encompasses substantial capacity enhancement, with the proposed addition reaching up to 10 lakh units annually. The company outlined that the ₹4,960-crore investment specifically covers land acquisition, development, and preparatory activities for the new facility.

Current Manufacturing Capacity and Utilization

Maruti Suzuki currently operates manufacturing facilities across multiple locations with substantial production capabilities. The company's existing infrastructure spans facilities in Gurugram, Manesar, Kharkhoda in Haryana, and Hansalpur in Gujarat.

The existing capacity figures include units produced at the erstwhile Suzuki Motor Gujarat Pvt Ltd, which has been amalgamated with the company. The full utilization of current capacity underscores the strategic necessity for this expansion initiative.

Investment Framework and Future Planning

While the board has approved the land acquisition cost, the company indicated that the overall investment amount will be finalized and approved during the phasing of capacity installation. This phased approach allows for strategic planning and resource allocation as the project progresses through different development stages.

The financing strategy combines internal accruals with external borrowings, providing flexibility in capital deployment while maintaining financial stability. This mixed financing approach reflects prudent financial management for large-scale infrastructure development.

Strategic Context

This expansion aligns with previously announced investment plans, as Suzuki Motor Corporation President Toshihiro Suzuki had announced in 2024 that Maruti Suzuki India would invest ₹35,000 crores to establish its second manufacturing facility in Gujarat. The current land acquisition represents a crucial step toward realizing this broader manufacturing expansion strategy in the state.