Maruti Suzuki R&D Cost Rise In 2011

By Suparna Chakaraborthy

Published: Wednesday, April 27, 2011, 12:28 [IST]

Maruti Suzuki India (MSI), the country"s leading passenger car maker is observing an unprecedented challenge from other car makers and particularly from the global auto majors. It has been said that MSI has stated that it expects costs incurred on research and development (R&D) to increase in 2011-12 as the company develops new models to maintain its nearly 50 per cent share of the fast growing car market.

Ajay Seth, CFO has said that the Maruti Suzuki Indian R&D expense is 1.1 per cent of net sales and that will increase to 1.3-1.4 per cent this year. Based on the Maruti Suzuki India R&D expenditure benefit extended by the Government, the tax rate should be lower at 26-27 per cent going forward.

Further, with five lakh unit additional annual capacity being included at Manesar and an Maruti Suzuki India R&D expansion in the pipeline, capital expenditure for the company is expected to reach Rs 4,000 crore in 2011 and then turn down. And the capex in 2010-11 stood at Rs 2,200 crore. Shinzo Nakanishi, CEO and MD, Maruti Suzuki has said that there is short-term uncertainty and competition in the Indian market however they are confident for the medium to long-term. The company will target to increase the profit margins from current levels through increased localization and efficiency.

Article Published On: Wednesday, April 27, 2011, 12:17 [IST]

Read more on: #automobile #maruti suzuki #new car

More from DriveSpark