Maruti Q3 net falls 17% to Rs 1,489 crore

NEW DELHI: Maruti Suzuki reported a 17.2 per cent drop in net profit for the third quarter, as expenses towards raw materials, marketing and sales increased, and it took a hit from adverse foreign exchange movements.


Shares of the nation’s largest carmaker crashed after the release of the earnings, which missed market expectations, hitting a 21-month low of Rs 6,420 intraday on the Bombay Stock Exchange Friday. They closed 7.4 per cent down at Rs 6,516.35.


Maruti posted a profit of Rs 1,489 crore for the quarter through December, compared with Rs 1,799 crore a year earlier. Analysts tracked by Bloomberg were on average expecting Rs 1,695 crore. Net sales remained almost flat at Rs 18,926.4 crore, compared with Rs 18,940 crore a year earlier.

The results come a month after Maruti Suzuki warned that it would not be able to meet the doubledigit-growth target the company had set for itself for the fiscal year, due to weak market conditions. The local unit of Japan’s Suzuki Motor undertook a price increase earlier this month to partially pass on the impact of rise in commodity costs to consumers.

On Friday, the company said higher expenses in resources and planned capacities also weighed on its performance for the past quarter.

In its filing with the stock exchanges, Maruti Suzuki said several adverse factors had come together, hurting profitability. These were, however, partially offset by the company’s regular efforts in cost-reduction and with the help of suggestions from employees and supplier partners, Maruti Suzuki said. Total expenses for the period increased 9.2 per cent to Rs 18,525.5 crore.

Bharat Gianani, a research analyst at Sharekhan, said the company’s volume growth was weak. “In the near term, both volume sales and margins will continue to be under pressure as consumer sentiments remain subdued and forex movement adverse,” Gianani added.

“The results of this quarter have to be viewed in the context of particularly weak market conditions,” Maruti Suzuki said. While the Society of Indian Automobile Manufacturers had projected 8-10 per cent growth in the domestic passenger-vehicle market for this fiscal year, the industry could grow by only 4.4 per cent in the first three quarters, it said. In fact, in the third quarter through December, industry sales had declined 0.8 per cent, it added.

Sales expanded 7.2 per cent in the first three quarters. In the third quarter, wholesale volume grew a mere 0.4 per cent.

The company said it helped dealers retail about 90,000 vehicles in excess of the wholesale numbers to keep their inventories lean, as festive season sales were below expectations. The company said it sold 4,28,643 vehicles in the past quarter.