The growth in the Indian automobile industry was in single digits in the first quarter of this fiscal. For Maruti Suzuki India, the country’s largest passenger car manufacturer, the figure was in double digits. Good news, but it also means a substantial increase in the royalty that the company pays to its parent company in Japan.
For the quarter ended June 30, the royalty amount for Maruti had gone up by 33.98% at Rs 138 crore, compared with Rs 103 crore during the same period last year.
“Barring Maruti 800 and Omni, the company pays royalty to Suzuki Motor Corporation in Japan on all models. Since there has been a great demand for some of the newly launched models including the Swift DZire just before the commencement of the first quarter, the amount of royalty has also gone up,” says a Maruti official.
He added that there has also been a partial impact of around 14% appreciation of the yen vis-?-vis dollar during this period on the royalty amount as per the RBI formula.
The higher demand for Swift Dzire and the top-end sedan SX4 during the first quarter had resulted in an increase of 18.13% in total revenue at Rs 5,436.5 crore, compared with the revenue of Rs 4,602.18 crore in the June quarter of 2007. This increase in revenues was on the back of more than the 13.5% rise in volume sales.
This, coupled with higher depreciation and power costs had pulled down the net profit of Maruti by 6.7% at Rs 465.8 crore for the first quarter, compared with Rs 499.6 crore during the same quarter last year.
During the first quarter of this fiscal, sales of Maruti’s mid-size sedans went up by 44.2% at 15,940 units, as compared with 11,056 units during the same quarter in 2007-08. This helped the company to garner a lead share of the market at 26.73%, followed by Tata Motors with 21.9% market share and 13,052 units as compared with 7,201 units in the first quarter of the last fiscal.
The demand for Maruti’s compact cars, which includes Alto, WagonR, Zen, and Swift, also went up by 13.6% at 1,25,427 units, compared with 1,10,413 units during the corresponding period last year.