Financial Daily from THE HINDU group of publications
Wednesday, Oct 15, 2003
Financial Daily from THE HINDU group of publications Wednesday, Oct 15, 2003 |
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Cars Corporate - Announcements Costlier steel, rising yen — Maruti mulls price hike in December Our Bureau
New Delhi , Oct. 14 MARUTI Udyog Ltd is likely to raise prices across all its models in December due to spiralling steel costs and the strengthening of the Japanese yen vis-à-vis the dollar. "We would be taking a look at our prices in December-January. Our contracts with the steel companies are coming to an end and we are re-negotiating the prices with our suppliers. Also the yen has become stronger at about 108 yen per dollar now from about 125 last year," Mr Jagdish Khattar, Managing Director of Maruti Udyog Ltd said. Maruti currently sources 26 per cent of its raw materials and components and about 35 per cent of its machinery spares from Japan. Concurrently, steel prices have also risen by about 20 per cent in the past few months. Maruti sources steel from South Korea, Japan and domestically from Bhushan Steel. Further, the company on Tuesday said that the strike at its key vendor DCM Engineering's foundry unit ended on Saturday. "The DCM strike has ended and we are hoping that regular supplies will commence within a week," Mr Khattar said. The strike, which commenced in July this year, had hit Maruti's production and supplies to the export markets. DCM Engineering supplies about 70 per cent of the company's cylinder block requirement. However, though the company's production declined in the April-September 2003 period, its sales have gone up by 26 per cent in the period. "The loss of production did not mean substantial loss of retail sales as there were dealer stocks in the market," Mr Khattar said. On cost cutting measures, Maruti said its recently operational aluminium foundry in Manesar (Haryana) would result in savings of Rs 60-70 crore annually and it would be expanded further. The foundry, which was established on an investment of Rs 115 crore, produces engine parts and would help in increasing localisation of Maruti models.
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