Maruti Suzuki on Thursday reported a modest increase in net profits of 4.4 per cent YoY for the quarter ending June 30 at Rs 1,556.4 crore. The profits were dragged down by a substantial increase in overall expenses, taxes and compensation paid to the dealers before the GST rollout. The company reported revenues of Rs 17,132 crore, up 16.7 per cent YoY.
Ajay Seth, chief financial officer, Maruti, said sales were subdued post the roll out of the GST in July though they were looking up. “We will have to wait till August to understand the full impact of the GST on the retail sales,” Seth said.
Operating profit margins contracted 150 basis points YoY to 13.6 per cent as expenses rose. Consequently, the operating profit or Ebitda (earnings before interest, tax, depreciation) increased by just 5.22 per cent YoY to Rs 2,331.2 crore.
Maruti reported higher volumes during the quarter, up 13.2 per cent YoY to 3.94 lakh units. That was despite wholesale despatches remaining subdued in June before the roll out of GST. Higher raw material expenses, excise duty and other expenses took a toll on the operating profit. Raw material expenses increased by 15.74 per cent YoY and as a percentage of net sales it increased by a whopping 270 basis points to 71.6 per cent from 68.9 per cent in Q1FY17.