Sejuti started producing small hatchback car AtomX since 2015 in India. The company faces tough competition from other car manufactures in already saturated small car market in India. Various regulations and trade agreements also prevent Sejuti to export AtomX.

Sejuti is currently producing 1,30,000 units of AtomX at its Goregaon plant, which has an annual installed capacity of 1,75.000 units per annum. The plant capacity is, however, well below the global optimal level of operation, which is estimated to be between 2,75,000 to 3,50,000 units per annum. Financial reports suggest that Sejuti is incurring losses since inception.

Should the company expand or contract its scale of operation? Give reasons