Maruti Suzuki India will not start paying royalty to parent company Suzuki Motor Corp in Indian rupees instead of Japanese yen. Chairman of MSIL declared this move at its annual general meeting and that this would help insulate the company from foreign exchange fluctuations.
MSIL will now play a major role in development of the products along with Suzuki and this should also result in a lesser royalty payout. For the first quarter of 2014, MSIL had to pay a royalty of Rs. 689 crore, which was 6.2% of net sales. The royalty figures are expected to come down with the launch of the upcoming compact SUV.
MSIL is investing Rs. 2,000 crore on a research and development facility in Rohtak, Haryana which will also include a test track. The facility in Gujarat currently under construction is also expected to be functional by 2017.
Source – Business Standard