India's largest car manufacturer, Maruti Udyog, which builds and distributes Suzuki-designed models, plans to increase revenue growth in the current financial year by boosting exports, according to Dow Jones.

The company expects shipments to Europe to rise 21% year on year to 39,000 vehicles, the report said.

Suzuki, Maruti’s controlling shareholder, will use its 250-strong European dealer network to distribute Maruti's small cars on the continent, market watchers, who attended an analysts' meeting at Maruti on Thursday, told Dow Jones.

India is a production base for Suzuki’s entry-level Alto minicar and, according to Dow Jones, Maruti exported 32,250 vehicles to the Netherlands, Italy, Germany, Switzerland and the UK in the financial year ended March 31, 2003. Besides these countries, Maruti also exports cars to Bangladesh, Nepal and Egypt, the report added.

Dow Jones noted that there is a strong demand overseas for Maruti's small cars, such as the Alto and the Maruti 800 [which is essentially a rebadged previous-generation Alto], which are priced below $US8,000.

The report added that Maruti is eyeing the overseas market to beat rising competition in India.

Maruti once had a near monopoly on the supply of small modern cars (rival Hindustan still builds the 1950s Morris Oxford-based Ambassador; the Contessa is a recycled 1970s Vauxhall Victor) but competition is coming increasingly from current models such as Hindustan's Mitsubishi line, Hyundai, which now uses India as its Santro/Atos production base, and General Motors Opel vehicles.

Dow Jones said that, with the Indian government cutting its stake in Maruti to 20% from 45% after the upcoming public offering and Suzuki in control of the company, market watchers expect the Japanese company to use Maruti's facilities as the production hub for its vast range of small cars. Suzuki will have a 54% stake after the IPO.

Sushil Financial Consultants analyst Achala Kelkar, who attended Maruti’s meeting, told the news agency that the firm’s management is also focusing on the low-end of the $US4-billion-a-year Indian car market to drive growth.

She said the company's financing options are likely to become more attractive and Maruti managing director Jagdish Khattar believes the company will be able to persuade some potential scooter/motorcycle buyers to purchase Maruti's entry- level vehicles priced below $6,000, Dow Jones added.

Another analyst told the news agency Maruti has an annual capital expenditure budget of 3.50 billion rupees over the next two years which, funded by Maruti's internal accruals, will be used to improve its production facilities in Gurgaon.

Maruti's latest balance sheet shows the company has reserves worth about INR10 billion, the report said.