Maruti’s Q4 profit up 170% to Rs 657 crore

Higher Sales, Cost Cuts Boost Auto Major's Margins, FY10 Net Rises 105% To Rs 2,498 Cr

New Delhi: Maruti Suzuki posted a 105% growth in net profit in the last financial year to Rs 2,498 crore, against Rs 1,219 crore in 2008-09, on higher sales and cost reduction steps. 

    The company said net profit in the fourth quarter of last fiscal was up 170% at Rs 656.5 crore from Rs 243 crore in the same quarter of 2008-09. Maruti's sales volume in the period stood at 287,422 units against 236,638 a year earlier, growing by 21%. Net sales revenue in the quarter grew 30% to Rs 8,235 crore from Rs 6,308 crore in the corresponding quarter. 
    The company, majority owned by Japan's Suzuki Motors, said net sales revenue in the fiscal grew 42% at Rs 28,958 crore against Rs 20,358 crore in the previous fiscal. Maruti's sales volume last year topped the million-mark for the first time as its grew 28.5% over the 7.92 lakh units sold in 2008-09. 
    The company's operating profit margin, or earnings before interest, tax, depreciation and amortisation expressed as a percentage of sales, stood at 13.7% against 9% in 2008-09. "Though our net sales increased, our profit was impacted to some extent by increase in raw material cost, cost of new model launches, cost of upgrade to Bharat Stage-4 emission norms and a decline in euro,'' Maruti MD Shinzo Nakanishi said. 
    Maruti CFO Ajay Seth said higher sales volumes and favourable foreign exchange rates helped the company realise higher profits. "The profit margins grew as our total overhead costs shrunk, material costs came down and we had price adjustment on the cars,'' Seth said. 
    The company plans to spend Rs 1,700 crore to double the capacity at its Manesar plant to 550,000 units during the next two years. Maruti's Gurgaon factory can produce 700,000 units annually. 
    Nakanishi said Maruti expects lower double-digit sales growth in 2010/11. "The market still continues to look good and we are positive. Last year, middle to lower cities, rural segment and government employee segments helped our sales. This year, we think the top cities will respond well," he said.