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Apr 27, 2012, 09.49 AM IST | Source: CNBC-TV18

Maruti to increase local sourcing in bid to cut yen effect

CNBC-TV18’s Ronojoy Bannerjee reports, quoting sources, that Maruti Suzuki is looking to encourage vendors to increase sourcing from the domestic market to lower its exposure to the yen which is turning volatile by the day.

Expecting the rupee to remain strong in the long-term, Maruti Suzuki is looking to encourage vendors to increase sourcing from the domestic market.

This would help the company lower its exposure to the yen which is becoming volatile by the day. The company wants to cut its indirect imports through vendors by half in three years, reports CNBC-TV18's Ronojoy Bannerjee, quoting sources.

As part of an aggressive indigenisation program to reduce the company's overall exposure to the yen, Maruti Suzuki is looking to cut its indirect imports by half in the next three years. Indirect imports refers to the import that a vendor makes on behalf of the compant.

Currently, the auto major's total annual import cost is about Rs 10,000 crore of which 50% or Rs 5,000 crore is on account of indirect imports.

The company has said in the past that it aimed to annually reduce imports by upto 3%, but sources have indicated plans to reduce even more. The company's board meeting on Saturday to discuss FY12 results might throw some light on this initiative.

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