Maruti Suzuki to cut forex exposure to $600 m by 2015

With adverse currency movements affecting margins, car market leader Maruti Suzuki India on Monday said it is targeting to reduce its forex exposure by nearly 65% to $600 million by March 2015 for which it is working with its vendors to reduce imports. Besides, the company is looking out for new markets to increase exports of its products to mitigate impact of unfavourable foreign exchange fluctuations.

"The adverse currency movements are affecting us. We are trying to reduce our net forex exposure to $0.6 billion by 2014-15 fiscal from about $1.7 billion at present," Maruti Suzuki India (MSI) chief financial officer Ajay Seth said.

The company's current foreign currency exposure, along with its vendors, due to import is $2.5 billion, he added.

"We have identified 14-15 vendors, whose import content is very high, and requested them to reduce it. We are also providing them all helps in more localisation of their products. Our target is to bring down the import content to $1.8 billion in the next three years," Seth said.

On the export front, the company's exposure at present is around $800 million.

"We are constantly looking at newer markets for expanding our exports. We are aiming to increase our exports to $1.2 billion by 2014-15," Seth said.

Hit by rupee depreciation and higher overall expenses, MSI had reported 22.84% decline in its net profit to R423.77 crore for the quarter ended June. Rupee has devalued this year drastically and crossed R56 against each dollar. However, on the back of robust capital inflows and persistent dollar selling by exporters and some banks, the rupee today rose by 35 paise to over four-monthhigh of 53.10 against the American currency.

Commenting on MSI's endeavour to reduce forex exposure, analyst firm Motilal Oswal said: "The management indicated that this is the highest priority of the company and progress of which is monitored at the board level."

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