Adverse currency movements like the rupee-yen exchange rate and higher input costs pulled down Maruti Suzuki?s net profit by 22.8% at R423.8 crore during the April-June quarter. The company had reported a net profit of R549.2 crore during the same period last year. The company?s total sales during the period were up 27.5% at R10,529 crore against last fiscal?s R8,256.6 crore, it reported on Saturday.
Maruti attributed the growth in sales to higher volume sales in units during the period due to favourable product mix and enhanced export realisations. However, it noted that the market demand continued to be skewed in favour of diesel cars, with petrol cars registering a decline. Maruti, which is the country?s largest passenger car manufacturer, currently sells mostly petrol vehicles, but is increasingly focusing on producing more of diesel models. Apart from a tie-up with Fiat for diesel engines, it has plans to set up a diesel engine manufacturing plant.
Domestic sales during the quarter were up 5% at 2.63 lakh units, while exports rose 6% to 32,632 units.
Analysts say the outlook for the company remains bleak in the coming quarters on account of two factors. The first pertains to the overall industry outlook, which is grim for passenger car growth, with industry body Society of Indian Automobile Manufacturers reducing the growth forecast. The second is specific to the company, which had to declare a lockout at its plant in Manesar because of labour violence on July 18.
The plant manufactures the company?s best-selling models like Swift and Dzire, which also come in diesel variants, the production of which has now come to a halt. The Manesar plant accounts for around 40% of the company?s total monthly sales, which is bound to be affected now since the company has said that work at the factory would not resume till investigations into the violence are completed.
As reported by FE earlier, the closure of the plant would lead to a loss of around R2,600 crore for the company every month.
Further, since the company?s chairman, RC Bhargava, has said that in future the company would not hire contract labourers for its core functions, employee cost would go up substantially in the days to come. Currently, of the 3,000 workers at Manesar, the bulk comprised contractual labourers.
The company?s overall expense during the quarter went up by 31.01% to R10,331.77 crore, from R7,886.16 crore in the same period last fiscal.
Expenses on materials consumed during the quarter surged to R8,063.04 crore from R6,408.33 crore in the same period last year, an increase of 25.82%.
The company?s expenditure on employees benefit went up 32.85% to R238.26 crore from R179.35 crore.
The other expenses increased by 57.31% to R1,363.33 crore during the first quarter from R866.63 crore in the year-ago period.
