Maruti Suzuki India will pay royalty on its future models to
parent Suzuki Motor Corp in Indian rupees instead of Japanese
yen to insulate from forex fluctuations.
Addressing shareholders at its annual general meeting,
Maruti Suzuki India (MSI) Chairman R C Bhargava said in order
that the company is "not exposed to the variation in the
exchange rate which has been happening in the past", royalty
to Suzuki for all future models will be in Indian rupees
instead of yen on the current models.
He did not specify what the future models would be but
according to company officials it could be those upcoming
products on which Maruti is yet to sign a technical agreement
with the parent.
Bhargava said with the company enhancing its research and
development capabilities and playing greater role in joint
product development with Suzuki, the royalty payout will also
decrease.
"More and more R&D work will be done in India and royalty
calculation will be based on work done here and our
expenditures on R&D will be rewarded in the form of reduced
royalty," he added.
In the first quarter ended June 30, 2014, MSI had paid
royalty of Rs 689 crore, which was 6.2 per cent of net sales.
MSI expects the royalty paid to parent Suzuki Motor Corp
to come down starting with its upcoming compact SUV as its
engineers enhance their role in the joint development of
future products.
The company, which is investing Rs 2,000 crore on a
research and development facility, including a test track at
Rohtak in Haryana, will enter the SUV segment early next year.
"Maruti has not been present in the SUV segment and
Suzuki Japan has been aware of it. Early next year we will
launch our SUV and a compact SUV will follow a year later.
With these we will have sizeable presence in the SUV segment
and fill unutilised capacity at Gurgaon and Manesar plants,"
Bhargava said.
On the Gujarat plant, Bhargava urged the shareholders to
exercise their franchise favourably in the voting that is to
take place sometime next month to let Suzuki own and invest at
the facility.
He reiterated that it was a win-win situation and would
enable MSI to invest on strengthening sales and after sales
network and enhancing R&D capability.
parent Suzuki Motor Corp in Indian rupees instead of Japanese
Addressing shareholders at its annual general meeting,
Maruti Suzuki India (MSI) Chairman R C Bhargava said in order
that the company is "not exposed to the variation in the
exchange rate which has been happening in the past", royalty
to Suzuki for all future models will be in Indian rupees
instead of yen on the current models.
He did not specify what the future models would be but
according to company officials it could be those upcoming
products on which Maruti is yet to sign a technical agreement
Bhargava said with the company enhancing its research and
development capabilities and playing greater role in joint
product development with Suzuki, the royalty payout will also
decrease.
"More and more R&D work will be done in India and royalty
calculation will be based on work done here and our
expenditures on R&D will be rewarded in the form of reduced
royalty," he added.
In the first quarter ended June 30, 2014, MSI had paid
royalty of Rs 689 crore, which was 6.2 per cent of net sales.
MSI expects the royalty paid to parent Suzuki Motor Corp
to come down starting with its upcoming compact SUV as its
future products.
The company, which is investing Rs 2,000 crore on a
research and development facility, including a test track at
Rohtak in Haryana, will enter the SUV segment early next year.
"Maruti has not been present in the SUV segment and
Suzuki Japan has been aware of it. Early next year we will
launch our SUV and a compact SUV will follow a year later.
and fill unutilised capacity at Gurgaon and Manesar plants,"
Bhargava said.
On the Gujarat plant, Bhargava urged the shareholders to
exercise their franchise favourably in the voting that is to
take place sometime next month to let Suzuki own and invest at
the facility.
He reiterated that it was a win-win situation and would
enable MSI to invest on strengthening sales and after sales
network and enhancing R&D capability.
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