Maruti Suzuki India (MSIL), the country’s largest car maker, on Friday reported a 17.80 per cent decline in net profit to Rs 565.17 crore for the quarter ended December 31, on the back of rising input costs, higher royalty payments and adverse foreign exchange movements.
MSIL had posted a net profit of Rs 687.53 crore in the third quarter of the previous financial year. The company’s sales stood at Rs 9,276.73 crore, an increase of 26.5 per cent over Rs 7,333.77 crore in the year-ago period. Ajay Sheth, chief financial officer, MSIL, said, “Sequentially, our profit after tax declined marginally from Rs 856 crore to Rs 793 crore. The pressure on margins was mainly on account of higher royalty payments and adverse foreign exchange movements.”
“On the export side, the depreciation of euro hit margins while a stronger yen had an impact on the import front,” he added.
The company paid Rs 460 crore as royalty, which amounts to 5.5 per cent of net sales, during the quarter.
Rising commodity prices hit margins with expenditure on raw materials and components rising 26.72 per cent to Rs 6,959.03 crore.
“On a short-term basis, commodity prices will remain a concern. We are putting in place cost-reduction measures and watching out for commodity prices,” said Sheth.
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During the quarter, the company incurred a one-time expense of Rs 51 crore on employees. Employee costs surged 75.50 per cent to Rs 232.45 crore from Rs 132.45 crore in the year-ago period.
MSIL’s average discount during the quarter stood at Rs 10,700 per vehicle, Rs 1,000 higher than in the previous quarter. Sheth said discounts led to a 40 basis points fall in profit margins.
Sales grew 28.16 per cent to 3,30,687 units as against 2,58,026 in the year-ago period. While domestic sales grew 36.83 per cent to 2,99,527 units from 2,18,910 units in the corresponding quarter of the last financial year, exports dipped 20.34 per cent. Domestic sales growth was led by Alto, Wagon R and Swift.
MSIL exported 31,160 units in the quarter as against 39,116 units in the year-ago period. Revenues from exports stood at Rs 839 crore as against Rs 1,314 crore in the year-ago period.
“The demand continues to be strong and we are prepared to grow 15-20 per cent. The concern for the longer term is the liquidity scenario, fuel prices, availability and cost of credit and commodity prices,” said Sheth.