Maruti’s AMT production to be ramped upto 5000 monthly in next 2 months

Maruti Suzuki India (MSIL) is in the process of ramping up production capacity of its much touted automated manual transmission to 5,000 units per month from the current 3,500 units monthly, over the next two months. With the new Alto K10 slated for a November launch and to be available also in AMT trim, it has become imperative for the carmaker to streamline its AMT supplies.

The waiting period of the AMT Celerio, that had earlier climbed upto 7-8 months due to capacity constraints on the vendors side has now come down to 3-4 months, R S Kalsi, Executive director of domestic marketing and sales, Maruti Suzuki told Autocar Professional.

When the Celerio was launched in February this year, AMT supplies from the supplier Magneti Marelli were in the range of 2000 units per month. With customer demand for this version   constituting almost 35-40 percent of the total, the need to ramp up capacity speedily became necessary.

Kalsi says that once Magneti Marelli sets up its new manufacturing line for the AMT at Manesar in the NCR, the production will be stepped up still further as many new Maruti models will be equipped with the automated manual transmission.

“The idea was not to wait for our supplier to first ramp up volumes and then get into AMT for a new model as we wanted to give a premium product in the entry segment as well. Today due to city traffic people desire AMT in cars so we are working with our supplier to enhance its volumes so that the AMT is not provided in one model at the cost of the other.”

Meanwhile, the Ciaz sedan that marks Maruti’s second foray into this premium segment has touched 17,000 bookings with 6000 vehicles delivered to dealerships so far. Most customers are upgraders who were earlier using the Swift or competitor products.

The diesel-petrol ratio has also simultaneously undergone a change – in 2012 while diesel constituted 60 percent of the industry’s product basket with petrol the balance 40 percent,  now it has reduced to 53 percent and this month was down to 50 percent with the price differential between the two fuels narrowing to Rs 11.

Kalsi expects the industry demand for diesel vehicles to stabilise at 47-48 percent with the same ratio expected for Maruti models which run on bi-fuels.  The overall diesel equation for the carmaker would stand at about 30 percent after diesel deregulation.

Today, Maruti Suzuki announced its half yearly and Q2 results. The company sold a total of 321898 vehicles in Q2 a growth of 16.8 percent. Of this exports were 34,211 units. Net sales were Rs 119,963 million a growth of 17.5 percent over the same period in the previous year. Net profit in Q2 stood at Rs 8625 million, up 28.7 percent compared to the same period last year. Growth in domestic sales and cost reduction initiatives contributed to the bottomline growth during the quarter.

During H1 half-year, Maruti sold 621792 units a growth of 14.7 percent. Of this exports stood at 63462 units a growth of 15.2 percent. Net profit was Rs 16248 million up 24.8 percent. Higher volume contributed to profits.

 RC Bhargava chairman detailed two important decisions taken by the Maruti Suzuki India board of directors. The board has recommended an increase in the foreign institutional investors shareholding in MSIL from 24 percent to 40 percent that will give shareholders greater freedom to buy and sell Maruti shares earlier restricted by the FII limit. The approval for the increase in FII shareholding will be taken at a general meeting and subsequently a request for notification will be made to RBI.

The Board has also decided to maintain the dividend payout at a range between 18-30 percent. The actual dividend for each year will be decided by the board based on availability of cash, profit level for that year and requirements of capital investments.  Bhargava said that last year the payout ratio was in the range of 10-15 percent but now with the company having a large cash surplus of over Rs 9000 crore as investments in the new Gujarat facility will be made by Suzuki Japan, MSIL will be in a position to dispense a larger dividend to shareholders and invest more on its marketing network.

So far MSIL has invested Rs 100 crore in the upcoming Gujarat plant and this will be paid back by Suzuki once the minority shareholders approve investment plans by Suzuki.  Maruti is close to reaching a market cap of Rs 1 lakh crore.