Maruti Suzuki India posts bleak net profit in March quarter

Saturday 26 April 2014, 17:04 PM by

India’s largest car maker, Maruti Suzuki India witnessed steep fall of 35.5% in fourth quarter profit of last financial year. Owing to snail paced sales and high costs, the company reported sudden drop in profit for the fourth quarter in FY 13-14.

Company’s total profit in the last quarter of fiscal 13-14 stood at Rs 800 crore as against Rs 1,239.62 crore in the same time last year. The net profit reported is much less than the company had anticipated, MSI’s net sales dipped by 9.5% to 11,818 crore.

Maruti Suzuki India posts bleak net profit in March quarter | CarTrade.com
Maruti Suzuki India posts bleak net profit in March quarter

Indian automotive industry is a victim of stagnant economic growth, continual inflation and increasing borrowing costs resulting in low demand for passenger cars in domestic market. Fiscal 2013-2014 ended on a bad note with fall in passenger car sales by 4.56% to 1.78 million units.

All hopes now lie on the new government; auto companies are expecting some positive change post elections. Low sales also affected company’s shares which fell by 1.35%, besides this, huge amount of money spent on promotional activities also added to the company’s woes. Biggest jolt came in the form of excise duty cut announced during the interim budget in February, for which the company had to compensate dealers a staggering amount of Rs 143 crore. MSI’s domestic sales fell 3.3% in the last three months of fiscal 13-14 and exports too weakened by 25%.

The company reported an increase of 16.3% in net profit for the complete year until March 31. Though, car sales dropped by 1.4 % to 1.15 million units. Company officials opine that, despite slump in sales, MSI’s net profit for last fiscal is better than the one posted in 2009-2010. Maruti Suzuki India is contemplating to build new factories in overseas markets, intensifying its marketing and sales network and expanding dealer network.