Maruti is the well-known car manufacturing of India. It’s subsidiary Suzuki Motor Corporation’s (SMC)is a Japanese automobile making company that is enjoying all time high royalty and dividends earned by Maruti that has nearly reached Rs 4000 crore. Maruti Suzuki manufactures and are known for selling famous Alto, Dzire, Swift and more in the India. And once again Maruti Suzuki has the grabbed the grip over the Indian customers by offering new launches like Baleno and S Cross, that has helped company to cover losses and mark growth. Maruti, which is the India’s largest car maker, pays Suzuki royalty on the net sales revenue.
Increased market share is observed to be 47% of this as compared to previous year which was 45%. The record profit posted by Maruti posted a record profit of Rs 4,571 crore in FY16 when compared to Rs 3,711 crore that was recorded in FY15. Through its 56.21 per cent stake in Maruti, Suzuki is entitled to a share in dividend announced by the Indian subsidiary.
Suzuki’s net income (profit) was Rs 7,291 crore approx in comparison with Rs 6,053 crore that was recorded in the previous year ended March 31, 2015. India is contributing to the Suzuki in the form of royalty and dividend that has went up to 54.5% in year ended March 31, 2016 that remained to be 52.76% in 2015. A growth of 24% is observed to rise which is counted on record of sales volume, net profit and revenue, posted by the Maruti Suzuki last year.
In FY15, the Maruti’s revenue was recorded as Rs. 48,605 crore translated into Rs 2,770 crore for Suzuki at a royalty rate of 5.7% while in FY16, a 6% royalty is offered to Suzuki as of Maruti’s revenue was Rs 56,350 crore, amounted to Rs 3,381 crore for Suzuki. Not only that, Maruti announced a record dividend of Rs 35 a share for FY16, up 40% from previous financial year which was FY15. This helped Suzuki to get richer by Rs 594 crore as a result of this dividend last year moreover, its dividend income was Rs 424 crore in FY15. There was an increase of 20% in Suzuki’s profit which was amounted to around Rs 7,291 crore by the end of March 31, 2016.
R C Bhargava, chairman of Maruti Suzuki says- “The future of Suzuki depends on the Indian market. Once production in Gujarat begins, sales in India will overtake Suzuki’s sales from rest of the world.”
Suzuki’s net sales in its domestic market which is Japan, received a gradual decrease of 4.3% to ¥1,047.9 billion in the year ended March 31, 2016. But at the same time talking about the net sales in the overseas, it has gradually increased by by 11% to ¥2,132.8 billion, mainly owing to India. Announcing its results for the year ended March 31, 2016 early this month, Suzuki said for the moment the group “will prioritize growth investment centering on India”. Suzuki is investing $2.8 billion (Rs 18,760 crore) for the plant which is to be set up in Gujarat and the products made by that shall be marketed by Maruti Suzuki. The good part is, first phase of the plant is soon to become operational in early 2017.
Verdict: India has become the center of attraction for all the international investors. If the customers are satisfied at pocket friendly prices in India, the company can enjoy the taste of profit, despite being in loss in their home country. This is soon understood by the manufactures and now Suzuki is expecting great turn-over after the operations of the Gujarat plant.
Author: Mrs. Viveka Nagar