Maruti To Combat Another Tussle From Japan

The auto industry world wide is at the jinx of recovery from the recent eruption of earthquake and tsunami. The Indian car maker Maruti Suzuki is on the verge of facing the crisis blooming from the Yen aspect. Maruti is exploring ways to compensate the difference of the amount arising out of fluctuations. The Chief Financial Officer of MSI said there has been no threat as of now and even April too would be a good period to stay on. But the subsequent months may not be favorable in the case of Yen"s appreciation forcing the company to initiate counter efforts. In all these years of business, Maruti had faced loss due to the fluctuation in the Yen value and the company prospers when the currency depreciates.

The impact of the recent natural disaster has made the currency to stand at 81 Yen for a US dollar against 83 Yen pre-disaster. The worst too came as a result of some volatile nature, with Yen standing at 76 against the dollar of late. Industry analysts view that MSI will meet the situation with currency hedging. He said Maruti Suzuki has been deriving 25% of components from Japan"s apex body and for purchases of worth 80% the company pays in terms of Yen. Already Maruti Suzuki has been affected due to the rise in input costs as the company"s expenditure during October-December last was Rs6959.03 crore for raw materials and components.

Also the company had to pay Rs460 crore by way of royalty to the apex company which constituted 5.5% of net sales for the company. He said as of now there has been no gravity on the need for components and the company will be able to manage for another two or three months. He made it clear that a stock of components are on way which have been dispatched before the earthquake. In an another move, the company cancelled the celebrations to mark the launch of the 1crore vehicle.

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