Maruti Udyog will have full model change capability by 2006-07, the company has said in the draft red herring prospectus filed with the Securities and Exchange Board of India prior to its initial public offer.

This means the company will be able to upgrade its existing models using indigenous research and development.

The draft prospectus states that Suzuki is planning to make Maruti its R&D centre for cars in Asia (outside Japan).

In 2001-02, Maruti's capital expenditure on R&D was Rs 16.8 crore. The company allocated Rs 32 crore for capital expenditure on R&D in the financial year ended March 31, 2003.

Maruti said some of the areas in which it was conducting research were localisation and development of components, cost reduction measures, development of alternate fuel like compressed natural gas and liquefied petroleum gas for vehicles, benchmarking of performance to parameters like noise, ride-handling and braking, and development of power-steerings for certain models.

"We regularly upgrade our models and also launch variants of our models by adding features developed through research and development," the company said.

"We have recently acquired the capability to provide facelifts to our models and upgrade our products in terms of technology or features. As part of Suzuki's plans to make Maruti its research and development centre for cars in Asia (outside Japan), we expect to have full model change capability by 2006-07," it added.

India's largest car manufacturer also said it was completely dependent on the entry-level car, Maruti 800, at the moment. Though it would continue to focus on the A-segment, comprising cars priced below Rs 3 lakh, new models would be developed to replace the existing ones, it added.

Growing competition from existing players and impending competition from new players would have an impact on the small car market, which constitutes more than 80 per cent of the car market in the country, Maruti said.

The road ahead

• The company will be able to upgrade its existing models using indigenous research and development.
• In 2001-02, Maruti's capital expenditure on R&D was Rs 16.8 crore (Rs 168 million).
• The company allocated Rs 32 crore (Rs 320 million) for capital expenditure on R&D in the financial year ended March 31, 2003.
• Car maker completely dependent on its entry-level car, Maruti 800, at the moment.
• While focusing on the A-segment, new models will be developed to replace the existing ones.