Maruti to Pay Royalty to Suzuki in Rupees
By ENS Economic Bureau | Published: 05th September 2014 06:00 AM |
BANGALORE: Maruti Suzuki India (MSI) will pay royalty to parent organisation Suzuki Motor Corp (SMC) for future models in Indian rupees.
The company pays in Japanese Yen for current models. The move to pay in rupees instead of Japanese Yen would help insulate the company from foreign exchange fluctuations, it was reported.
R C Bhargava, Chairman of MSL (India) reportedly said, “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.” Bhargava was speaking to shareholders at the company’s AGM.
Agencies reported that the MSI had paid Rs 689 crore as royalty; accounting for 6.2 per cent of net sales in the first quarter of Fy15. MSI, which is India’s largest car maker, is hoping that royalty payments would come down with their imminent entry into the compact SUV segment as engineers from MSI continue to ‘enhance’ their role in the joint development.
“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,” agencies quoted Bhargava.