Maruti Profits Surge Driven by Low Costs

Friday 24 July 2009, 00:00 AM by Satish Kalepu

India’s largest car manufacturer, Maruti Suzuki, is booking good profits again. A company that refused to be deterred by the worst phase of economic meltdown is now booking better profits. It’s not only sales this time but also lower input costs. Maruti, a company that largely depends upon local content, remains unfazed by currency fluctuations or import duty in India.

The first quarter profits of the company are higher by 25.3 percent as reported in the audit report for the quarter ended June 2009. Profit for the quarter is Rs. 583.54 crore, as compared to Rs. 465.9 crore in the corresponding period last year. It posted total sales of 226,729 units, representing 17.7 per cent growth during the first quarter of 2009-10. This included export of a record 29,314 units, representing a 134.7 per cent growth over the same period of the last fiscal.

The net profit also benefited from lowering of commodity prices and favorable currency fluctuations which especially benefitted the company in exports. One of the intriguing reasons for higher profits this time is that the customer preferences are moving towards higher end models which mean better profit margins.

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