“For this month, we are completely protected. In fact, we are covered till April. Beyond that if yen continues to appreciate, then we will have to take a call to counter it,” MSI CFO Ajay Seth said. He said the company’s margins are affected whenever the yen appreciates, while it is beneficial if it depreciates.
There is strong volatility with yen appreciating as much as to 76 yen against a dollar recently.
On component sourcing from Japan, Seth said: Of our total raw material procurement, about 25 per cent are imported. Out of those imported parts, about 80 per cent are purchased in yen.
During October-December period last year, MSI spent Rs 6,959.03 crore in consumption of raw materials and components. It paid Rs 460 crore as royalty in the quarter to Suzuki, which is about 5.5 per cent of Maruti’s total sales.
On the impact of Japan’s disaster on production, he said it will be unaffected for some time till next month as the company has enough inventory of components.