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Maruti’s parent Suzuki commences export of New Swift produced at Gujarat plant

Suzuki Motor Corporation (SMC), parent company of India’s largest Passenger Vehicle (PV) manufacturer, Maruti Suzuki India Limited (MSIL), started export of the all new Swift produced at SMC’s Gujarat plant. SMC’s cars in Gujarat are produced by its 100% subsidiary, Suzuki Motor Gujarat Private Limited (SMG) at Hansalpur. MSIL acts as the merchant exporter.

SMC began production of the New Swift (through SMG) in January 2018; however this is the first time that a car was exported from the plant. MSIL’s export volume contributed just 2% to its total volumes in March 2018 and FY18, hence it plans to increase export contribution and footprint through the arrangement.

As per the press release, SMG was established with SMC’s 100% investment to meet the rapidly growing demand in India as well as for expansion of exports from India. Plant No.1 of SMG started operations in February 2017 with annual production capacity of 250,000 units. Plant No.2 is being constructed and will start operations in the beginning of CY2019, while Plant No.3 is also being planned. The total annual production capacity of these three plants would be 750,000 units. The plant is spread over an area of 26 Lakh sq. ft. and currently produces Baleno and Swift models.

MSIL stands to benefit from strong product portfolio backed by higher volumes. Current capacity is 1.8mn units (1.55mn in old plants + 2,50,000 in Gujarat), Gujarat Phase II will add another 2,50,000 by January, 2019. The Gujarat land bank can support up to 1.5mn unit production capacity. The all new Swift has received strong response with order book of 40,000 units since its launch in Feb-18. Downward revision in royalty payment to Suzuki will boost profitability.

MSIL has a market share of more than 50% in passenger vehicle (PV) segment in India (FY18). Domestic sales of the company contributed 93% to the revenue, while exports contributed 7% in Q3FY18. The company’s focus on premium passenger vehicle segment via NEXA has improved product mix. MSIL is also in the process of setting up a Lithium battery plant in Gujarat for developing an ecosystem for electric mobility.

Maruti Suzuki India Ltd is currently trading at Rs9,275.50 down by Rs15.7 or 0.17% from its previous closing of Rs9,291.20 on the BSE.

The scrip opened at Rs9,261 and has touched a high and low of Rs9,307.10 and Rs9,240 respectively. So far 2,23,408 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs2,80,668.57cr.