Cash-rich South Korean car maker, Hyundai Motor India is ramping up capacity at its Sriperumbudur plant on the outskirts of Chennai and has invested Rs 1,474 crore in FY-22 to increase output to 8.5 lakh units and prepare itself for future growth.

In its annual filing to the Ministry of Corporate Affairs sourced from Veratech Intelligence, the Korean Chaebol said the company is accelerating its EV plans as it expects the market for electric vehicles to grow at a compounded annual growth rate of 90 percent to $150 billion by the end of the decade.

Hyundai Motor India said, during FY-22, the company started the process of increasing the production capacity to 8.50 lakh units p.a. to meet the market demand by further automating certain processes, removing a few bottlenecks in the production process, supply chain and introduction of new models.

The on-ground investment from Hyundai Motor comes at a time, when its Indian rival Tata Motors is inching closer to its number two position in the highly competitive Indian passenger vehicle market.

With a big focus on catering to the domestic market over the last few years amid chip shortage, according to people in the know, the company is now readying itself for an aggressive year both on domestic and exports front.

The company has lined up a new sub-compact SUV codenamed Ai3 CUV to take on Tata Punch and an all-new Verna codenamed BN7I – this has a very significant export contribution with the Russian manufacturing base impacted post the Russia-Ukraine war.

The sub-compact SUV which is lined up for the festive season in 2023 will bring in the much-needed incremental volumes to regain its lost share and exports of close to 1 lakh units of the new Verna to global markets, which may call for a higher output.  

Hyundai Motor India closed FY-22 with profit after tax of Rs2,861 crore, posting an increase of over 54 percent and the total revenues for the year were at a record high of Rs47,623 crore growing by over 15 percent.  

Thanks to healthy earnings, the South Korean car maker paid a dividend of close to Rs1,470 crore to the parent in the last financial year.

The company was amongst the most profitable car makers in India in FY-22 making more than double profit per car than the market leader Maruti Suzuki with 40-45 percent of its car sales in India coming from above Rs 10 lakh bracket.

Reviewing the year FY-22, the directors note stated it was a busy year for the Company as it navigated these challenges to successfully strengthen the fundamentals of the business.

The total production of the Company for the year was 6.06 lakh units as against 5.67 lakh units in the previous year posting an increase of 7 percent.

The semiconductor shortage impacted production to a large extent.

However, plant two achieved the highest production of 143,206 units in June 2021 which was significant in post COVID times.

On the current macroeconomic environment, the directors report noted that with the recent reverberations of war tilting the balance of risks downwards in the country, the Government's thrust on capital expenditure in FY23 can act as a game-changer by enhancing productive capacity, crowding in private investment, and strengthening aggregate demand.

On the rising penetration for EVs, the company said the drivers of EV adoption are the rising fuel prices and higher cost of ICE vehicles that impact their affordability. 

Government support for EV's is also playing a big role. Central schemes such as FAME and PLI have increased the investments in manufacturing of EV's. "Many state governments have also provided demand incentives and capital assistance for setting up greenfield manufacturing plants.

Your company is accelerating its electrification strategy to become a market leader in the EV segment,” added the note from the company. 

The company had announced plans to invest about Rs4,000 crore in FY-22 for research and development over the next seven years as it looks to roll out six new electric vehicles in India by 2028.