India: Maruti-Suzuki promises increased financial transparency image

India’s largest automaker – Maruti Suzuki – has moved to pledge to its investors increased clarity on its investment strategies from March on, as the company needs to find ways to relax unsettled investors over increased backlash coming from low returns.

Maruti has recently reported a lower-than-forecasted profit earlier on Tuesday for the last quarter – with one of the reasons being its low yield from ongoing investments, On the other hand, the carmaker has a growing pile of cash at hand, $1.3 billion in cash, net of debt, primarily invested into debt mutual funds that bring around eight to nine percent profit. There has been growing pressure from shareholders lately – especially among the top ones – to have the company showcase mores transparently its investment strategy to upgrade the efficiency and clarity of capital use. On the other hand, they also seek a return of the cash to investors through dividends or a share buyback. “We are working out our budget for next year now, for which we will seek board approval in March,” commented Ajay Seth, Maruti’s chief financial officer.

The Indian company is a subsidiary of Japan’s Suzuki Motor Corp, and asked by Reuters it said it would move to use the surplus cash for new model introductions – including the launch of a new sport utility vehicle, while also moving towards land investment to be used in expanding the dealership network. The latter move upset some of the investors, as the real estate business is not part of the company’s core strategy.

Via Reuters