Maruti Suzuki’s second quarter net profit declined 5 percent
year-on-year to Rs 227.5 crore, hurt by a month-long closure of its Manesar
plant following a labour unrest and higher discounts and other incentives
offered to boost sluggish sales of petrol vehicles.
The country's largest passenger car maker reported quarterly
net sales of Rs 8,070 crore, up 9 percent year-on-year.
Maruti's results were in-line with analysts expectation of a
net profit of Rs 215 crore on revenue of Rs 8,050 crore, according to a
CNBC-TV18 poll.
Domestic passenger vehicle sales, especially petrol driven,
have been slow over the last one year due to high fuel prices and expensive
loans. Most car makers, including Maruti, have been offering higher discounts
to boost demand for petrol cars like its Alto, WagonR and A-Star.
Overall the demand has moved to diesel powered vehicles and
Maruti's Swift and compact DZire have been among the top selling here. However,
a workers riot at Manesar plant, where the Swift and DZire are manufactured,
and the subsequent one month lock-out by the company hurt sales and stretched
waiting periods.
"The market showed a marked preference for diesel cars,
while demand for petrol vehicles dropped sharply. Despite scaling up production
of diesel cars, the company has a customer waitlist of nearly 1.25 lakh for its
diesel vehicles. To counter subdued demand for petrol cars, the company
enhanced sales promotion measures that also impacted profitability,"
Maruti Suzuki said.
Further, while second quarter earnings before interest,
taxes, depreciation and amortization (EBITDA) grew 15 percent year-on-year, a 30
percent rise in depreciation and lower non operating income also reduced
profits, it said.
The company said it continues to focus on component
localisation and reduction in costs and overheads.
In July-September, the company sold 2, 09,954 units in the
domestic market, down 6 percent from a year ago. Its exports skidded 32 percent
at 20,422 units during the same period.
In the first half of this financial year (Apr-Sep), Maruti
Suzuki sold 4, 73,218 units in the domestic market, up marginally from 4,
73,089 units a year ago, helped by the newly launched Ertiga multi-utility
vehicle and compact DZire sedan. Its exports declined 13 percent to 53,054
units during the same period.
Shinzo Nakanishi, Maruti's MD said that the Ertiga has got
good response in India and abroad. Ertiga is exported to Indonesia and Thailand
currently. The new Alto 800 launched earlier this month too has clocked 30,000
bookings in a short time, he added.
Maruti Suzuki is confident that the second half of this
financial year will be better than the first half due to strong demand for the
new products coupled with festive season and year-end purchases.
Maruti Suzuki shares closed up 2.1 percent at Rs 1,390.80 on
NSE on Tuesday.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
