Maruti net rises 39.8% on small car demand

Riding on high sales of small cars, the country's largest carmaker, Maruti Udyog Ltd, today reported a 39.89 per cent increase in net profit to Rs 367.4 crore for the quarter ended September 30, 2006.

Total income after factoring out excise duty grew 12.52 per cent to Rs 3,540.89 crore.

Maruti Udyog Managing Director Jagdish Khattar indicated that the company would take some crucial initiatives in the next two quarters.

"We will launch the diesel version of Swift in this financial year and some price review is also expected in December," Khattar said.

The results for the July-September quarter were in line with market expectations. The Maruti scrip rose 0.63 per cent today to close at Rs 952.25 on the Bombay Stock Exchange.

The company reported 19 per cent growth in the sales of A1 and A2 cars (Maruti 800, Alto, WagonR and Swift) and 6-7 per cent growth in the sales of mid-and large-segment cars (Versa, Esteem, Baleno and Vitara), during the quarter.

According to automobile analysts, the company's profit margin in Maruti 800 is as high as 20 per cent, compared with 10-14 per cent for larger cars.

"The lower share of exports, which yield lower margins, also helped the company to increase its margins," an industry expert said.

The company's ongoing programme to rationalise input costs also helped in improving the numbers.

"Despite an 8 per cent rise in raw material expenses, Maruti managed to control its raw material expenses as a proportion of net sales to 74.8 in this quarter, from 77.9 in the same period last year," a Mumbai-based automobile analyst said.