US embargo on Iran oil may spell fresh troubles for Indian auto firms: Bhargava

Rutam Vora Ahmedabad | Updated on April 26, 2019

RC Bhargava ,Chairman of Maruti Suzuki India Ltd

Maruti chief not sure of demand pick-up this year for a slew of reasons, including BS--VI

The decision of US President Donald Trump to end waiver enjoyed by countries including India on Iran oil imports may cause further difficulties for India’s automobile sector.

RC Bhargava, Chairman of Maruti Suzuki India Ltd, cautioned that domestic factors, coupled with latest international developments, may impact the demand.

Bhargava said, “This year we have Mr Trump putting an embargo on Iran oil, implementation of BS-VI and also safety regulations. If none of those factors was present, I would have said with great confidence that the (auto) demand will pick up. But because of this happening, customer behaviour has become unpredictable.”

On a visit to Ahmedabad on Friday for the foundation stone-laying ceremony of two CSR projects, Bhargava also made it clear that the expansion at the Gujarat plant will continue as per schedule.

CSR activities

Under the CSR programme, Maruti will invest Rs 125 crore over the next five years to build a hospital in association with Zydus Group and a school under Podar Group near Becharaji in Mehsana.

Bhargava said: “After commissioning the second line of 250,000 cars in January this year, the Gujarat plant will achieve the full capacity this year. Currently, the installed capacity is 500,000 units, but it can produce up to 550,000 to 575,000 cars.”

He further stated that a third line for another 250,000 units will be operational by April, 2020. The Gujarat plant is run by Suzuki Motor Gujarat Pvt Ltd, a wholly-owned subsidiary Suzuki Motor Corp.

Manesar unit

On MSIL’s plans to shift its Manesar facility, Bhargava clarified that the new plant will come up within Haryana, but the location is still to be worked out. “The intention is to keep the plant in Haryana,” he said.

Cautious note

The company currently has an inventory for three-weeks, which is lower than normal level of about four weeks.

However, on the demand projection, Bhargava maintained a cautious stance for one to two quarters.

“By June or July, we will get a clearer idea on what is happening in the market and how the customer would behave,” Bhargava said.

Published on April 26, 2019

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