Maruti Udyog, the country's largest car producer, is turning out to be the jewel in the crown of its Japanese parent, Suzuki Motor Corporation. It contributed over 29 per cent of Suzuki's net profit in April-December 2006, though it accounted for less than 7 per cent of its turnover.
In 2004-05, Maruti represented just 14 per cent of Suzuki's profit.
Suzuki reported a profit of $479 million on a turnover (net of sales) of $18.65 billion during the nine-month period. Maruti, in comparison, clocked a profit of $253 million (Rs 1,113 crore) on a turnover of Rs 10,164 crore ($2.31 billion) during the period.
As Suzuki owns 54.21 per cent of Maruti, it took $137 million as its share of the profit. And this accounted for as much as 29 per cent of Suzuki's profits.
Experts said that Maruti's rising share in Suzuki's profitability has prompted the Japanese company to invest $2 billion (Rs 9,000 crore) in India over the next three years to increase its local production capacity to a million cars and make India a hub for its global requirements for small cars and compacts.
Amit Kasat, auto analyst at Motilal Oswal, said: "Maruti will continue to gain preference in Suzuki's global operations for the next four-five years owing to good volume growth and higher profit margins. The proportion of profit will further rise as Maruti will serve as the global manufacturing hub of small and compact cars for Suzuki with 30 per cent cheaper production costs advantage (to Japan)."
