Maruti grins year to year with net up 21%

Aug 01 2014, 01:54 IST
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SummaryCost cuts, volume growth and favourable forex movement drive growth; bevy of launches in pipeline

Maruti Suzuki’s net profit for the quarter ended June 30 beat street estimates, jumping 21% year-on-year to R762 crore — analysts had estimated R730 crore. The improved performance came on the back of rising demand for small cars both at home and overseas, and favourable forex movement.

Net sales for the quarter rose 11% to R11,073 crore, largely in line with analysts' estimates. Domestic volumes in the quarter rose 10% to 2.70 lakh units on the back of strong demand for mainstays like the WagonR, Dzire and Alto, besides the new Celerio. Export volumes in April-June also went up 39% to 29,251 units.

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“The company’s cost-reduction and localisation initiatives, growth in volumes and favourable foreign exchange helped improve the bottom line during the quarter,” a company statement said.

After a lull last fiscal, Maruti has a bevy of launches planned this year. That is likely to help it gain market share, which currently stands at 42%. The company has set a growth target of 10-15% for the fiscal, and is on track with 10% growth in April-June.

In September, the company will launch the Ciaz mid-size sedan to challenge Honda's top-selling new City, followed by a diesel variant of the Celerio, a new Alto variant with a bigger 1-litre engine, and facelifts for the Swift, Dzire and Ertiga models. It will also foray into the light commercial vehicle segment with a new diesel-powered product challenging Tata's Ace and Mahindra's Maxximo.

Separately, the company will also seek shareholders’ vote by September on the revised proposal for its new mega-facility that is scheduled to come up in Gujarat. Instead of Maruti operating the plant, Japanese parent Suzuki Motor has sought approval to directly invest in the plant through a wholly-owned subsidiary, which will then sell fully-built cars to Maruti on a no-profit basis. The move will help Maruti save on capital, which it can re-invest in other areas, such as marketing and overseas expansion.

The scrip closed down 1.07% on the BSE, at R2,524.50, on Thursday.

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