Maruti Suzuki India (MSIL) will now take the lead and invest in all future assembly plants across the world for its parent Suzuki Motor Corporation (SMC), which may leverage MSIL’s INR70bn (US$1.29bn) cash reserves to make fresh investments abroad.
MSIL’s chairman R C Bhargava told Business Standard: “As and when we expand global footprint and decide to set up assembly operations overseas, the investments would be made by the Indian subsidiary. Vehicles would continue to sell under the Suzuki brand, as it is well-known in most markets.”
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Industry sources believe the company could set up a base in the ASEAN region.
Bhargava said, “We are considering where it will be advantageous for us to set up assembly operations. Apart from the tariff structures in a particular country, we also have to evaluate the capability of the local component industry. It is important to do local value-addition, to benefit from commencing vehicle assembly…
“Chairman Osamu Suzuki’s frequent visits are reflective of the growing importance Suzuki is attaching to MSIL in its global scheme of things. There is little scope for growth in Japan. It is costly to export from there. Suzuki has to look at India for growth and also as a base for exports for more models.”
Frost & Sullivan’s senior director (automotive practice), V G Ramakrishnan said: “Suzuki does not have the resources to invest in overseas facilities. RBI [Reserve Bank of India] guidelines are such that the parent company cannot take reserves out of the country, except through dividend payments or royalty fees, which are not so huge. So, India will take the lead and handle global expansion projects directly.”
MSIL contributed 45% to Suzuki Motor’s sales in vehicle units and 25% to its sales revenues in the last financial year.
