The Telegraph
Since 1st March, 1999
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Maruti does an IPO with bottomline
- Balance-sheet boost peps up shares of performers on the trading screens

New Delhi, July 23: Maruti Udyog, the country’s largest carmaker, today reported a net profit of Rs 123.2 crore in the first quarter (April-June) — almost 11 times higher than Rs 11.5 crore in the year-ago period —a month after investors lapped up its IPO 10 times.

The dramatic surge in profits was driven by attractive financing schemes and the soaring sales of its cheap and popular 800 cc car.

The Delhi-based carmaker said in a statement that total income leapt 44 per cent to Rs 2,109 crore from Rs 1,475 crore.

Car sales vaulted 47 per cent to 1,04,017 units. Exports, which constitute around 12 per cent of total sales, grew 254 per cent to 12,496 units, the statement added.

In the last fiscal ended March 31, the auto-maker had sold 3,62,426 vehicles including cars, vans and utility vehicles, up 3 per cent from 2001-02. However, net profit during the year soared 40.1 per cent to Rs 104 crore on revenues of Rs 9,426 crore.

Shares of Maruti, which completed a hugely successful public offer last month, closed at Rs 176.70 on the Bombay Stock Exchange (BSE) in brisk trading that saw over 46.18 lakh shares, worth Rs 80.55 crore, change hands.

Maruti, owned 54.2 per cent by Japan’s Suzuki Motor Corp, had a blazing debut on the BSE early this month, notching up a market capitalisation of close to Rs 5000 crore.

The government, which owned 45.8 per cent of Maruti, had sold 27.5 per cent of the carmaker's equity in the public offer as part of its privatisation drive. The issue was oversubscribed 10 times and raised Rs 993 crore.

Maruti, which is persuading many of the country’s 29 crore-strong middle class to upgrade from motorcycles, is the country’s first stand-alone car company to list.

Of the 11 firms that make cars in India, only two — Telco and Hindustan Motors — are listed. Telco also makes trucks while Hindustan Motors produces utility vehicles and auto parts.

“Lower interest rates and attractive financing schemes will fuel demand and there should be a 10 per cent rise in sales this financial,” said Nirav Seth, vice president, research of SSKI Securities. “Net profits should grow by 150 per cent to a figure of Rs 360-370 crore.”

Currently, 70 per cent of new cars bought in the country through financing schemes.

However, stiff competition from new entrants such as Hyundai Motor Co, Fiat SpA, Ford Motor Co and Tata Engineering and Locomotive Co is eating into Maruti’s market share, which has shrunk to 55 per cent, from more than 80 per cent five years ago.

Currently, the company makes 10 models, including Zen and Wagon R compact cars, and imports one fully-built utility vehicle from Japan.

During the 2002-03, cumulative new car sales rose 6.4 per cent to 5,41,738 units after a flat previous year as manufacturers cut prices, offered discounts and a host of other incentives.

Esteem clone

A Suzuki official told Bloomberg at Hamamatsu in Japan that Maruti will release a new model that will replace its mid-size Esteem as early as next year to boost sales and increase its market share there.

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