Country?s largest car manufacturer Maruti Suzuki posted a 5% jump in net profit on the back of record sales in the last quarter, fortifying its dominant position in the domestic car market. In the July-September period, the company?s total net profit stood at Rs 598.2 crore as against Rs 570 crore recorded in the same period last year.
The company?s net sales during the period jumped 26.8% to Rs 8,937 crore as against Rs 7,049 crore registered in the same period last year. During the quarter, the company recorded its highest sales of 2.77 lakh units as compared to last year?s 2.09 lakh units, thereby registering a growth of 33%. The Ebitda margins for this period stood at 10.7%.
According to Maruti Suzuki managing director and CEO Shinzo Nakanishi, the ?lower? net profit was primarily on the account of euro depreciation, higher royalty payout and a surge in commodity prices. Steel prices have increased 10% in the last three months, which put pressure on the company?s bottom lines.
Nakanishi added by early next year, Suzuki and Volkswagen are likely to announce India-specific plans that might include joint production and vehicle design. ?Some time end of this year or beginning of next year, they (Suzuki and Volkswagen) may announce some projects,? he said when asked about the progress of the talks between the two global car majors on any India-specific project.
Royalty payout to its Japanese partner Suzuki Motors during the first half of the financial year almost doubled to Rs 949.6 crore compared to Rs 483.9 crore in the April-September period last year. During the quarter, royalty payments stood at 5.3% at Rs 471.6 crore. During the same period last year, the company paid a royalty of Rs 257.9 crore amounting to 3.7%.
Nakanishi said the company would increase localisation from the domestic market, which was part of a continuous effort and would also look to reduce cost of production. He said the company had increased production by 10% in a bid to keep up with the rising demand. In the second half of the financial year the company said it would focus on the non-European markets for exports which accounted for 60% in the financial year. Last year, non-European markets constituted 20% in the total export basket.
Vaishali Jajoo, auto analyst with Angel Broking, said the results were better than expectations. ?The cost-cutting measures adopted by the company has helped Maruti. Going forward though there would be pressure on margins due to increase in commodity prices but the increase in volumes by the company would be beneficial,? she said.
During Q2, the company launched a refurbished version of its highest selling car Alto. The A2 segment, bread and butter for the company, grew 30% for Maruti while A3 segment registered a growth of 29.2%.