Strong festival season sales, helped by the stimulus provided by the government, and buoyant exports drove the net profit of Maruti Suzuki up 92.5 per cent to Rs 570 crore for the quarter ended September 30. The company, owned majority by Suzuki Motor Corporation of Japan, is the largest player in the Indian car market with a share of over 50 per cent.
“During the quarter, we had good festival season sales and the response to our new models was good. Also, we saw robust exports,” Maruti Suzuki India Managing Director and CEO S Nakanishi said.
However, the company said its profit margins could get squeezed in the coming quarters because of the indications that prices of steel, copper and aluminum may go up and also the Japanese Yen might appreciate which will make imports of components expensive.
Maruti Suzuki reported a 46.67 per cent jump in its net sales for the quarter ended September 30 to Rs 7,049.58 crore. Domestic sales grew 21.9 per cent at 209,083, led by new models such as the Zen Estillo, A-Star and Ritz. Exports more than doubled to 37,105.
Sector experts said Indian automobile exports could suffer in the coming quarters with several countries in the West removing the “scrappage” incentive for small fuel-efficient cars.
Analysts were not elated at the performance. They said the results were mildly disappointing when seen sequentially. Maruti Suzuki, they added, needs to watch out for cost pressures in the next few quarters. But Maruti Suzuki Chairman RC Bhargava said that the “impact of the rise and fall in commodity prices will visible in a few months time. Affect of the rising commodity prices will not impact current quarter results.”
The company will invest Rs 150 crore on the upgrade and expansion of its plant in Gurgaon near Delhi, which will be completed by December.
It will increase the plant’s capacity by 90,000 units from 600,000 units annually. “Work on new technologies like the expansion of the K-series engine, new generation CNG injection systems and new model development is on track,” said Nakanishi.