Last week, Suzuki apologized to their consumers around the world for claiming wrong fuel efficiency figures. This resulted in a negative impact on their market capitalization, which declined as their stock prices plunged by 10% overnight.
The condition now is such that Suzuki’s subsidiary in India, Maruti Suzuki India Ltd. is bigger than its parent. Maruti Suzuki overtook Suzuki in market capitalization last year, but now Maruti growing to as much as 1.5 times the size of Suzuki, is a new achievement for India’s largest car maker.
As of today, Suzuki’s market capitalization stands at $11.72 billion whereas that of Maruti Suzuki stands at $17.66 billion. Not only market capitalization, Maruti is getting closer to parent Suzuki on other fronts as well. Be it sales or profit.
In FY 2015/16, Suzuki posted net profit of $973 million at revenues of $26.5 billion. On the other hand, India’s Maruti Suzuki posted $718 million in profits at revenues of $8.7 billion. This clearly shows that the Indian subsidiary, in which Suzuki holds a 54% stake, is far more profitable than its parent’s global business put together.
Speaking of sales, Maruti sells as many Suzuki cars in India, as the parent company sells in the entire world. In other words, Maruti accounts for almost half of Suzuki’s global sales.
Payments by Maruti to Suzuki in terms of royalties and dividends, has also reached an all time high. For the financial year 2015/16, payment made to Suzuki touched a record breaking figure of INR 3,975 crore! With Suzuki opening a plant in Gujarat next year, these payment figures look like are only going to go up from here on.