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Maruti profit skids 35% on triple hurdles

New Delhi, April 25: Maruti Suzuki India has reported a 35.46 per cent decline in net profit at Rs 800.05 crore for the fourth quarter ended March 31, 2013, compared with Rs 1,239.62 crore in the same period of the previous financial year.

Low volumes, high promotion expenses and compensation to dealers because of a reduction in excise duty affected the company’s earnings during the quarter.

Net sales declined 9.48 per cent to Rs 11,818.13 crore from Rs 13,056.26 crore a year earlier, the company said in a statement. Sales dropped 5.48 per cent to 3,24,870 units during the quarter.

“The lowering of profit in the fourth quarter was partly because of dealer compensation due to excise duty cut,” Maruti Suzuki India chairman R. C. Bhargava said. The total compensation to dealers worked out at Rs 143 crore.

The dealers had to be compensated for the inventory they had procured at a higher price from the company but had to sell at a reduced price because of the excise duty cut.

However, for the financial year ended March 31, the company reported its highest ever net profit at Rs 2,852.92 crore, an increase of 15.53 per cent over Rs 2,469.28 crore in 2012-13.

The previous highest annual profit was in 2009-10 at Rs 2,497.6 crore. Net sales for 2013-14 stood at Rs 43,271.78 crore against Rs 43,215.83 crore in the earlier fiscal. Exports in 2013-14 were down at 101,352 units from 120,388 units previously.

“Overall, despite a declining market, we could increase our annual profit on the back of our cost reduction and localisation initiatives, together with favourable foreign exchange,” Bhargava said.

He added that the auto sector was betting big on the election results and a stable government to help the industry revive.

Sources said in the next four years Maruti might be coming out with as many as 14 models.

Meanwhile, Maruti Suzuki would be seeking the approval of minority shareholders for its proposed plant in Gujarat, which was taken over by parent Suzuki Motor Corp.

Maruti Suzuki came under pressure from institutional investors after saying in January it had accepted Suzuki’s proposal to implement the Gujarat project in Mehsana.

Bhargava said the Japanese parent would double its equity infusion in the plant at about Rs 3,000 crore. This will be in addition to the planned investment of Rs 3,000 crore.

 
 
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