Marutis Q2 net profit drops 60%; to buy land in Gujarat

Written by fe Bureau | New Delhi | Updated: Oct 30 2011, 08:12am hrs
Plagued by an incessant bout of labour strikes at its Manesar plant, coupled with poor market conditions and volatility in yen prices, the countrys largest carmaker Maruti Suzuki has reported a 60% drop in net profits for the second quarter ending September 30 to R240.4 crore as compared to R598.24 crore in the corresponding period last fiscal.

The company cited tough market conditions, yen volatility and industrial unrest as the primary reasons for the hit. During the quarter, the domestic auto industry remained sluggish on account of increase in fuel prices and hardening interest rates, leading to higher sales promotion expense. The companys bottom line was also impacted due to adverse foreign exchange rates, the company said in a statement.

Marutis total vehicle sales during the second quarter dipped by nearly one-fifth to 2.52 lakh units as compared to 3.13 lakh units in the same quarter last fiscal. The companys total income from operations during the quarter also dipped by 14.3% to R7,831.62 crore, as against R9,147.27 crore last year.

The company lost 28,539 units during the quarter due to instances of industrial unrest at its Manesar facilities, the company statement said.

Meanwhile, companys board approved the setting up of third facility and the first outside Haryana. The proposed facility would come up in Mehsana district of Gujarat. The company said, This purchase would be subject to final negotiations on price and all legal formalities being completed.

In September, Suzuki chairman Osamu Suzuki and Maruti Suzuki chairman RC Bhargava had met Gujarat chief minister Narendra Modi. At that time the company had said that it could invest up to R18,000 crore including investments from its 500 -odd vendor base. Modi was quick to welcome Maruti's entry in the state.