|
| India’s largest carmaker Maruti Suzuki hasn’t run out of incremental earnings-growth drivers despite the steep run-up in its stock. The latest trigger for earnings growth will likely be lower royalty fees to the Japanese parent and gradual localization at its Gujarat plant. |
| Maruti is working on a new royalty structure on car models launched after January 2017. In the December 2017 quarter, Maruti paid 5.3% of its net sales as royalty to its parent Suzuki Motor. The new rates, on a retrospective basis, will be applicable for models launched after January 2017, and even for the facelifted versions of Swift and Dzire. |
| New royalty rates are likely to be lower than the current structure as India’s R&D division has also started contributing to vehicle development. Maruti has put in place a new R&D facility at Rohtak in Haryana. It plans to invest a total of Rs 4,000 crore at the R&D facility. |
| All times are GMT +5.5. The time now is 20:20. |