Maruti Suzuki net profit dips over 50 percent during Q2 FY11-12

Monday 31 October 2011, 12:27 PM by Vikas Yogi

The country’s largest car maker Maruti Suzuki has registered a dip of over 50 percent in its quarterly net profits in the second quarter of this financial year. The series of strikes in last three months has incurred the company a huge loss $500 million, due to a production loss of 83,000 units of its cars. Last month, the Indian auto giant accounted for only 40 percent of sales due to halted production and continuously rising waiting period for its cars. According to company, its net profit dipped to Rs 2.40 billion ($49 million) in the quarter ended on 30th September, as compared to profit of 5.98 billion rupees registered during same quarter last fiscal.

In a recent statement, Jagannadham Thunuguntla, head of research at SMC Global Securities, said, "The economic slowdown does not augur well for the automobile sector as such and demand is unlikely to rebound any time soon." While further elaborating the current situation of company’s market share he said, "Maruti will take quite some time to recover lost market share because the rivals have become very aggressive and are looking to tap the opportunity."

Moreover, the rising input material costs and declining demand in the Indian market has further worsened the situation for the Maruti. The decreasing demand coupled with halted production due to strike, has affected the company’s market share very badly.

While commenting on the situation, Maruti Chairman R.C. Bhargava said, "We were more hurt than anybody else because we have a large position in small cars, where most of the buyers are very marginal."

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