Maruti Suzuki, the Indian unit of Japan’s Suzuki Motor Corp, will pay a record dividend after the country’s top-selling automaker posted its highest-ever net income, buoyed by the sale of more expensive models.
Maruti Suzuki India Ltd. will more than double the dividend per share it will pay for the year through March to 75 rupees ($1.2), up from 35 rupees a year earlier. The automaker’s dividend policy has been modified to be as much as 40 percent of profit, compared with an earlier cap of 30 percent, Chairman R. C. Bhargava said at a press conference in New Delhi Thursday.
The higher payout comes on the back of a rebound in India’s auto demand, after deliveries declined in December when the government’s move to withdraw old high-denomination banknotes led to a cash crunch. Maruti is also reaping the rewards of a decision in 2015 to start a chain of premium showrooms to sell higher-end models.
An increase in share of “higher-segment models” and running factories at full capacity helped boost profit by 37 percent to 73.4 billion rupees ($1.14 million) in the year through March. The automaker sees a strong product portfolio, favorable interest rates and improvement in market sentiment, according to a stock exchange filing Thursday.
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Shares of Maruti fell 0.5 percent to 6,374.05 rupees in Mumbai, compared with a 0.3 percent decline in the benchmark S&P BSE Sensex Index.
For Suzuki, which owns 56.2 percent of Maruti, the record dividend comes after its acrimonious split with Volkswagen AG in 2015. The Hamamatsu, Japan-based automaker is now examining a partnership with Toyota Motor Corp., which could lead to an alliance in areas including technology and the mutual supply of products and components.