Maruti's Q2 net profit slips 60%

Board approves land purchase to set up one-million-unit plant in Gujarat.

Hit by a month-long labour unrest at its plant in Manesar, coupled with a slowdown in automobile sales, Maruti Suzuki saw a 59.81 per cent decline in its net profit to Rs 240.44 crore for the quarter ended September 30. The company had posted a net profit of Rs 598.24 crore in the same period last year.

Maruti’s total income from operations in the second quarter fell 14.38 per cent to Rs 7,831.62 crore, from Rs 9,147.27 crore in the same period last year.

During the quarter, the company’s vehicle sales decreased 19.56 per cent to 252,307 units from 313,654 units in the same period last year. “Maruti Suzuki lost 28,539 units during the quarter due to instances of industrial unrest at its Manesar facility,” a company statement said.

This year, the company has seen three instances of labour unrest at its Manesar plant, which mainly produces the Swift. In June, a 13-day strike had brought production at the facility to a standstill. It was followed by another standoff between the management and the workers that broke out on August 29 and lasted for 33 days.

This month, the company’s workers again went on a strike that lasted 14 days and ended last week after a tripartite agreement was signed by the management, workers and Haryana government representatives.

The company’s bottom line was also impacted by foreign exchange rate fluctuations. “During the quarter, the domestic auto industry remained sluggish due to increase in fuel prices and hardening interest rates, leading to higher sales promotion expenses,” the company said.

In the July-September period, the company’s expenditure on raw consumption decreased 18.58 per cent to Rs 5,649.65 crore from Rs 6,938.88 crore in the same period last year, as its production volume remained low.

The total expenditure also went down during the second quarter, by 9.76 per cent to Rs 7,603.80 crore from Rs 8,426.20 crore in the period a year ago, the company said.

Meanwhile, the company’s board approved a proposal to purchase land in Gujarat’s Mehsana district to set up onemillion-unit manufacturing facility.