Other income drives Maruti Suzuki profits to record

Net sales increased 12% to Rs 14,654 cr

An otherwise flat profit of the country’s largest car maker Maruti Suzuki has been lifted by the 134 per cent jump in other income during the quarter ended June 30, 2016.

The quarterly profit rose 23 per cent to record Rs 1,486 crore, helped by an additional Rs 277-crore increase in other income. Net profit in corresponding quarter of previous year was Rs 1,208 crore. Other income grew 134 per cent to Rs 483.3 crore against Rs 206.5 crore in same quarter last year.

RIGHT DIRECTION

• The rise in net profit was helped by an additional Rs 277-crore increase in other income
• Other income grew 134% to Rs 483.3 cr against Rs 206.5 cr in June quarter
• Net sales for the quarter rose 12% to Rs 14,654 crore
• Maruti sold 348,443 units during the quarter

Net sales for the quarter rose 12 per cent to Rs 14,654 crore on higher volumes and better product mix of vehicles sold. The company’s stock, which opened in the green on Tuesday, closed in the red. At the BSE, the stock lost 1.44 per cent to close at Rs 4,485.25.

“The profit in the quarter was helped by a higher turnover, material cost reduction, higher non-operating income and lower depreciation. Adverse foreign exchange movement reduced profits to some extent,” the company said. Parent Suzuki got a royalty of Rs 961 crore from Maruti, an increase of 32 per cent, compared to Rs 728 crore in corresponding quarter last year.

Maruti, which enjoys a 47 per cent share in the domestic passenger vehicle market, sold a total of 348,443 units during the quarter, a growth of 2.1 per cent over the same period last year. This includes 322,340 units in the domestic market, where sales grew 5.4 per cent. Exports during the quarter stood at 26,103 units, down 28 per cent.

Raw material cost during the quarter was marginally up to form 69.1 per cent of net sales during the quarter, against 68.9 per cent in same quarter last year. The employee cost also increased to 3.9 per cent of net sales against 3.6 per cent.

Maruti’s volume growth in the quarter was impacted by a disruption in supplies of a key component. The volume growth in the first two months of the quarter (April-May) was 10.2 per cent but it had to shut operations at both the plants, following a fire at the Manesar unit of Subros, its key air-conditioner unit supplier.

The company hopes to recover the lost sales during the course of the year.