Maruti Suzuki India (MSI), country’s leading car manufacturer on Monday announced a three- fold jump in its net profit for the second quarter of the current fiscal.
Company’s net profit surged nearly three times to Rs 670.23 crore against Rs 227.45 crore in Q2 FY13 on account of sales effort especially in rural areas, cost reduction initiatives and positive impact of foreign exchange.
Commenting on the Q2 results, Kenichi Ayukawa, Managing Director and CEO of the company said, “This growth was achieved on the back of focused sales efforts, especially in the rural areas, proper product planning, cost reduction initiatives and gain from rupee depreciation.”
The company also benefited from unusually low levels of profit in the second quarter of last year (July-September 2012) owing to labour problems in Manesar. Higher localisation and cost reduction initiatives by the company also contributed significantly to bottom line growth during the second quarter.
Company also benifited from the rupee depreciation seen during the quarter. Talking about the forex gains, company’s Chief Financial Officer, Ajay Seth said, “The overall impact of forex gain was Rs 164 crore during the quarter compared to the year ago quarter.” The company’s net sales also jumped by 26.5 per cent to Rs 10,211.83 crore as against Rs 8,070.11 crore in the quarter last fiscal.
Talking about the company’s outlook for the remaining part of the fiscal, Ayukawa said, “Economic scenario continues to be uncertain and we have to rely on our effort to increase sales. We will start feeling the impact of rupee depreciation in the later quarters and our target is to sell more than what we sold last year.”
In terms of volumes, sales were up by 19.6 per cent in the second quarter to 2,75,586 units compared 2,30,376 in the year-ago period. “Discounts during the quarter on an average was Rs 17,500 compared to Rs 13,000 in the same quarter last year,” Seth said.
In its official statement, the company said that its new diesel engine facility at Gurgaon and the third assembly facility at Manesar also went on stream during Q2 FY14 with which the company’s total capacity for vehicle assembly has increased to 1.5 million vehicles per annum.
Ayukawa added the demand for diesel has gone down while that of petrol vehicles has picked up. In the second quarter, automobile industry’s sales of diesel vehicles declined by 14 per cent while that of petrol increased by 16 per cent, he added.
He also said that keeping in mind the long term growth prospect, the company would continue with its plans for the diesel engine plant in Gurgaon. Shares of Maruti Suzuki India on Monday closed at Rs 1,513 apiece on the BSE, up 0.41 per cent from the previous close.