Country’ largest car maker Maruti Suzuki India on Thursday announced 36.6 per cent jump in its annual profit to record Rs7,511 crore for the last fiscal, while fourth-quarter net rose by 15.8 per cent. The company’s net profit in 2015-16 was Rs5,497.2 crore
The company has earmarked Rs4,500 crore capex for the current financial year.
.”Capex for this year (2017-18) is Rs4,500 crore,” MSI Chairman RC Bhargava told reporters here.
The amount would be spent on various activities including replacement of machinery, R&D and marketing initiatives, he added.
On R&D alone, the company plans to invest in the range of Rs700-1,000 crore, Bhargava said.
Some portion of the capital expenditure or capex could also go towards acquisition of land for expansion of sales and service network, he added.
Its net sales for 2016-17 were at Rs66,909.4 crore, up 18.5 per cent from the previous fiscal.
Volumes for the financial year ended March 31 were up 9.8 per cent to 15,68,603 units. Of this, exports were at 124,062 units, MSI said.
The company had posted record annual profit and sales in 2015-16 as well. The MSI board has also recommended a dividend of Rs75 per share of face value Rs5 for 2016-17 entailing a total outgo of Rs2,726 crore inclusive of taxes. MSI had paid a dividend of Rs35 per share in 2015-16.
Bhargava said the year was in some respect challenging due to demonetisation because of which “everybody expected all bad things to happen but it did not”.
There were also environmental issues with various agencies functioning in a manner which create difficulties for automobile companies to function, he added.
MSI said it was able to overcome the challenges with “growth in volumes, increase in share of the company’s higher segment models, benefits due to full capacity utilisation and cost reduction efforts”, all of which contributed to increase in profits.
At the same time, rise in commodity prices and adverse forex movement partially impacted the annual financial performance, it added.
MSI Chief Financial Officer Ajay Seth said the company had a total adverse foreign exchange impact of around Rs 700 crore during the fiscal.
On dividend payment, Bhargava said the company’s board has approved modifying the payment policy from 18-30 per cent of profit to 18-40 per cent.
With total cash reserves of Rs 23,000 crore, he said, the company’s payout for 2016-17 would be around 37 per cent of profit.
He said MSI will be using the cash reserve to enhance its sales and service network across the country, for which it has already started acquiring land.
“We have to increase our sales and service to almost two to three times the current size if the company has to double its sales to around three million which will take less than ten years,” Bhargava said.
Investment on sales and service network will be in “thousands of crore”, he added without specifying details.
MSI has around 2,200 showrooms and 3,200 service outlets across India.