Maruti has registered a net profit of Rs. 1,019 crore in the 3rd quarter of financial year 2015-16. Although the profits rose 27.1%, the Indo-Japanese carmaker missed its target of Rs. 1,330 crore profit, estimated by various analysts, by approximately Rs. 311 crore. Missing its profit target brought some bad news for the company, as its shares fall 4% today morning. This comes at a time when company increased its cost on advertisement and launches.
Maruti’s executives on an occasion said that margins were reduced because of a series of launches which resulted in an increase in the marketing cost. Advertising costs went up by Rs.70 crore last quarter, which saw launches of premium hatchback Baleno, WagonR AGS, and a facelifted edition of the Ertiga, amongst others.
“There was also an exception during the quarter. Conversion costs on inventory gets reduced from material costs. We could convert only 4,000 units in stocks last quarter as we were clearing 2015 vehicles, as against a normal of 20,000-25,000 units. This impacted profits margins”, said Ajay Sheth, chief financial officer of Maruti Suzuki.
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Maruti launched some great cars like Baleno last year. It invoked enormous sales and has dominated its segment so far. The carmaker is ready to nail the 2016 Auto Expo with its refreshed lineup, including cars like Vitara Brezza, Suzuki Ignis and Baleno RS.
Also Read: Maruti Suzuki Announces Auto Expo 2016 Lineup
Source : CarDekho
