Maruti Net Up 27.6% At Rs 651cr

Maruti Udyog Ltd yesterday announced a 27.6 per cent jump in its profit after tax in 1997-98 at Rs 651 crore, as against Rs 510 crore posted in the previous year. Profit before tax touched Rs 976 crore, up 20.8 per cent from Rs 808 crore in 1996-97,

According to the companys provisional results, its internal resources now total over Rs 1,450 crore Rs 804 crore in 1997-98 and Rs 658 crore in 1996-97. We will thus be able to finance our entire Rs 1,200 crore expansion project without taking recourse to any debt against the Rs 900 crore debt projection last year, said managing director RSSLN Bhaskarudu after a press conference in the capital.

However, the amount of dividend to be paid to the two shareholders the government and Suzuki Motor of Japan was yet to be decided even as company executives said they would like to maintain dividend at the same 20 per cent level as in the previous two years.

Maruti Udyog, which became a debt-free company at the end of 1997-98, has managed to improve its margins from 10.16 per cent to 11.54 per cent, its highest ever since inception. This is despite a reduced return on average capital employed during 1997-98 at 52.17 per cent against 55.63 per cent the previous year.

The increase in the margins has been achieved following cost savings on various counts. These include a Rs 100-crore saving achieved on account of increased localisation in the different car models, a Rs 60-crore saving following input cost reduction by vendors, Rs 75 crore saved on account of the Kaizen continuous improvent programme and employee suggestions, and an additional Rs 20 crore from inventory cost management.

The company has managed to reduce its inventory holding of cars to less than two days in the course of the past few months, from the earlier 10-15 days. It has also depressed its inventory holding of components and parts to two hours as against the two-day period in vogue a few months ago.

The inventory management has led to a Rs 100-crore reduction in inventories, leading to Rs 20 crore savings for the company from a reduced interest burden.

Maruti Udyog paid the exchequer a total of Rs 2,623 crore Rs 2,016 crore as excise duty payment, Rs 282 crore as customs duty and Rs 325 crore as income tax. This is against a payout of Rs 2,525 crore last year.

Marutis foreign exchange earnings in 1997-98 stood at $120 million against an outgo of $185 million. The company will be foreign exchange neutral in another three-four years, said A R Halasyam, director, finance.

Commenting on the emerging competition in the face of a 25 per cent fall in sales in the Esteem segment in 1997-98 as compared with the previous year, Bhaskarudu said: We will aim to hold on to our 80-82 per cent market share. Our main concern is not the competition from the new entrants but the sluggish state of economic growth. If the economy picks up, we can better our results. Otherwise, next year will be a hard year.