Maruti Q4 net up 80% at R1,147.5 cr on new models

Written by feBureau | New Delhi | Updated: Apr 27 2013, 07:19am hrs
The countrys largest car maker, Maruti Suzuki, on Friday recorded its best-ever profit during the January-March quarter, largely on the back of higher sales of new models such as Ertiga, DZire and Swift, cost reduction and localisation efforts and the benefit of a favourable exchange rate.

It was thus able to defy the worst slowdown seen in the domestic car sales in the last 12 years. Net profits during the period increased 80% at R1,147.5 crore, beating analyst estimates. The previous record in profits was in Q3 FY09, when it posted a net profit of R688 crore.

Net sales during the quarter went up 9.4% at R12,566.6 crore, but Q4 volumes fell almost 5% to 3.43 lakh units with demand for popular petrol models like the Alto and WagonR slowing down. The Q4 results do not include the merger of Suzuki Powertrain India, maker of diesel engines, with Maruti Suzuki. The merger has become effective on April 1, 2012, but the formalities were recently completed in March after court approvals. Maruti also merged seven insurance-related arms into itself, giving it additional cash of R200 crore.

While cost savings and localisation efforts had a positive impact of 130 basis points on the margins, a weakening yen helped Maruti gain another 120 bps through lower royalty payouts and cheaper import costs, CFO Ajay Seth said. Significant gains during the quarter also accrued from a 1% price increase the company announced in January, and the increased sale of higher margin diesel variants like of the Ertiga, Swift and Dzire. Ebitda margin during Q4 stood at 10.6%, higher than 7.5% in the same quarter last year.

For the full fiscal 2012-13, net profits rose almost 41% at R2,300 crore, while net sales went up 21.37% at R42,123 crore. Total volumes during the fiscal was up 3.32% at 11.71 lakh units, 37% of which came from diesel cars. Low demand for popular petrol models forced the car market leader to utilise only 80% of its 15 lakh annual production capacity in FY13.

The last fiscal was a challenging year because of weak economic growth and depressed consumer sentiments. We improved market share by 1% to 39.1% in the year largely because of diesel engines. For the industry, diesel car sales went up to 58% from 48% in FY12, while petrol car sales fell for two years in a row, said Marutis outgoing MD & CEO Shinzo Nakanishi. Nakanishi, who has been associated with Maruti since its formation in 1984, has been succeeded by Kenichi Ayukawa from April 1.

Ayukawa will meet Gujarat chief minister Narendra Modi on Friday with Suzuki Motor chairman Osamu Suzuki to discuss Marutis plan for its upcoming mega-facility in the state. To start by 2015-16, Maruti and suppliers will invest over R23,000 crore on the facility, which at full capacity will churn out 2 million cars.

On the outlook for FY14, Nakanishi said while concerns remain, the company is bullish on long-term prospects in the Indian car market. Discounts are high, so it is the best time to buy a car. Our expansion plans with Plant C and the new diesel engine plant are on schedule and will come by the second half of this fiscal, Nakanishi said.

Meanwhile, COO (marketing and sales) Mayank Pareek said Maruti would target nearly all segments to maintain its leadership. The focus will also be on rural sales, the share of which as gone up to 28% from 4% in the last three years.