Maruti Suzuki India on Tuesday posted a 35.87 per cent increase in net profit to Rs 681.15 crore for the third quarter ended December 31 on account of higher localisation, favourable foreign exchange and cost reduction initiatives.
The company's board decided that the investment in the Gujarat facility will be made by a 100 per cent Suzuki subsidiary and not Maruti Suzuki India (MSI).
"The company will be named Suzuki Motor Gujarat Pvt ltd with a starting capital of Rs 100 crore," Suzuki Motor Corporation Chairman Osamu Suzuki told reporters here.
Suzuki Motor Gujarat, which will be set up by April, will not be a listed firm, he added.The company had posted a profit of Rs 501.29 crore in the corresponding period of the previous financial year.
Net sales in the quarter under review, however, declined 3.07 per cent to Rs 10,619.68 crore from Rs 10,956.95 crore a year earlier.
"Higher localisation, favourable foreign exchange and cost reduction initiatives by the company contributed significantly to net profit," the company said.
The volume of sales dropped 4.41 per cent to 2,88,151 vehicles during the third quarter from 3,01,453 units.Sales remained under stress during the period, in both domestic and export markets," it said.
During the period under review, the company's market share in the domestic market stood at 42.8 per cent, a gain of 2.5 per cent over the third quarter of 2012-13.
MSI board had in October 2011 approved purchase of land in Mehsana District of Gujarat for further expansion of manufacturing facilities.
Around 640 acres of land in Becharaji and around 550 acres in Vithalapur were acquired. The expansion of facilities was kept on hold due to market conditions.
MSI said it recently received an attractive proposal from Suzuki Motor Corporation (SMC) for implementing the expansion project through a 100 per cent Suzuki subsidiary.
Following which the company's board today decided that the time was now appropriate to expand production facilities in Gujarat.It (board) approved implementing the expansion through a 100 per cent Suzuki subsidiary because it would result in substantial financial benefits to MSI, and its minority shareholders," the company said.