Consumer goods cos keeps FY27 capex intact despite Iran war, rising crude and input costs
Despite rising input costs due to the Iran war, leading consumer goods makers are maintaining their capital expenditure plans for FY27. Companies like Maruti Suzuki, Tata Motors, and Hyundai Motor India are proceeding with multi-thousand-crore inv...
Kolkata | New Delhi: Leading consumer goods makers said their capital expenditure plans for FY27 remain on track despite the Iran war, which has led to a surge in crude oil prices and input costs and necessitated price increases that have eroded much of the gains from the goods and services tax (GST) rate cuts.
The country's largest car maker Maruti Suzuki. on Tuesday announced a fresh investment of ₹10,189 crore to set up its first assembly line with a capacity of 250,000 units a year at its fifth manufacturing facility in Khoraj Industrial Estate, Gujarat, by 2029. The move is part of its plan to scale up total production capacity to four million units annually by 2030 from 2.4 million units.
Several players set to increase investments in FY27 as they expect disruptions from the war to have little impact on long-term demand
Companies including Hyundai Motor India, Tata Motors, LG Electronics, Dixon Technologies, AWL Agri Business, Haier India and PG Electroplast will also proceed with planned capex, with several set to increase investments from this year's levels, betting that the impact of the war will be short-lived.
Chief executives said most expansion projects have long gestation periods and are unlikely to be altered by near-term disruptions, especially as India's consumption trends remain intact.
"Capex will continue as usual as such issues should not come in the way of long-term planning," said Angshu Mallick, executive deputy chairman, AWL Agri Business. "There is no stop-gap arrangement for expansion plans as these disruptions can settle anytime and capex requires time to execute." AWL Agri Business is the country's largest packaged edible oil manufacturer.
ADVERTISEMENT
Maruti Suzuki managing director Hisashi Takeuchi told investors last week that increasing incomes will support consumption and expand the domestic market.
A Tata Motors spokesperson said the company remains bullish on passenger vehicle growth, expecting the industry to exceed six million units by 2029-30, implying a 6-7% compound annual growth rate.
Most large companies have outlined multi-thousand-crore capex plans. Tata Motors is executing a ₹33,000-₹35,000 crore programme between FY26 and FY30, focused on new products, software-defined vehicles, advanced technologies and powertrains. Hyundai Motor India is rolling out a ₹45,000 crore investment plan.
Maruti Suzuki's latest capex is in addition to the 500,000 units per annum capacity it plans to add at its existing facilities in Kharkhoda (Haryana) and Hansalpur (Gujarat) in the coming fiscal.
