Reports 0.5% increase in net profit in fourth quarter.
Despite registering record sales of 1.27 million units, Maruti Suzuki India Limited (MSIL), the country’s largest car manufacturer, on Monday reported a decline of 8.4 per cent in net profit at Rs 2,288.6 crore for the financial year 2010-11 on account of increased input costs, adverse foreign currency movements and new car launches.
MSIL had posted Rs 2,497.6 crore in net profit in the previous financial year.
The company, however, reported marginal growth in net profit in the fourth quarter of 2010-11 at Rs 659.9 crore, against Rs 656.5 crore it made in the corresponding period a year ago.
Its total income during the quarter grew by 19.19 per cent to Rs 1,021.2 crore. MSIL sold 343,340 units in the January-March period, compared to 287,422 units in the year-ago period.
MSIL has earmarked Rs 4,000 crore for capital expenditure in the current financial year. The resources will be utilised on R&D, capacity enhancement programmes and in launching new nodels.
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“There was a significant increase in commodity prices and additionally expenditure increased due to foreign exchange fluctuations. The impact due to forex fluctuation is one per cent of net sales. Apart from that there were lot of new model launches, which also had cost impact,” MSIL Chief Financial Officer Ajay Sheth said.
The impact due to increased input costs amounted to 250 basis points and that due to adverse foreign exchange movement to another 100 basis points. In 2010-11, MSIL launched the new WagonR, Alto K10, Kizashi, SX4 diesel. The company declined to share details of the expenses incurred in marketing these vehicles.
The company’s consolidated income in the last financial year increased 24.6 per cent to Rs 37,522.40 crore. Sales rose 24.8 per cent to 1,271,005 units, beating the previous record of 1,018,365 units sold in 2009-10.
“It was a landmark year for the company as we crossed the one-million-unit mark in the domestic market. The year also saw the company recording its highest-ever total sales,” said Managing Director Shinzo Nakanishi.
The company’s royalty payment to Suzuki Motor Corporation, its parent, increased 86 per cent last financial year to Rs 1,981 crore, against Rs 1,063 crore a year ago. “Last year, royalty amounted to 5.1 per cent of net sales. This year, it will be between 5 and 5.5 per cent,” Sheth added.
The company expects growth rate in the automobile industry to moderate in the coming months. Nakanishi informed, “In the medium to long term, Indian economic growth is very strong, however, in the short term there is uncertainty due to fuel price rise, commodity price increase and higher interest rates. Also the high base effect has to be factored in. But if the momentum continues we are prepared.”
MSIL is investing Rs 3625 crore to set up two plants with a combined installed capacity of 0.5 million units at the existing facility in Manesar. The first of these two plants will be operational by October this year.