Driven by foreign exchange gain,the country’s largest car-maker Maruti Suzuki India (MSI) today reported 49 per cent jump in net profit at Rs 631.6 crore for the first quarter ended June 30,2013.
The company had posted net profit of Rs 423.77 crore in the April-June quarter of last fiscal.
Sales were down 9.98 per cent to 2,66,343 units,from 2,95,896 units in the year-ago period as the auto market continued to reel under demand slump.
In value terms,MSI said Q1 net sales were Rs 9,995.12 crore as against Rs 10,529.24 crore in the same period a year ago,down 5 per cent.
“Favourable foreign exchange rates during the quarter helped improve export realisation and limit the impact on net sales,” the company said.
Besides,MSI said the increase in net profit was also due to focussed cost reduction efforts undertaken by it and the benefit from merger of Suzuki Powertrain India Ltd (SPIL) with the company in the 2012-13 fiscal.
Addressing analysts,MSI Chief Financial Officer Ajay Seth said: “Rupee depreciation has helped in higher export realisations.”
The company however did not quantify the forex gains.
Stating that it was a challenging quarter as demand was low,Seth said the company had to increase efforts to woo customers.
“During the quarter,the average discount across the models was Rs 13,446 as against Rs 11,646 in the year ago period,” he added.
Seth said that going forward “there will be significant increase in the discounts offered on cars. We should prepare for that. Discounts of diesels cars have gone up because diesel engine sales are declining and discount on diesel cars is impacting margins”.
MSI scrip ended the day at Rs 1,414.20,down 0.12 per cent from the previous close on the BSE.
Maruti Suzuki said domestic sales were down 6.8 per cent at 2,45,346 units during the first quarter of 2013-14,as against 2,63,264 units in the year-ago period.
Exports were also down to 21,088 units,as compared to 32,632 units in the same quarter last fiscal.
Commenting on domestic demand break-up,Seth said: “Rural sales registered double digit growth while sales in the urban areas registered negative high single digit growth. We expect rural sales growth to continue going forward”
Rural sales accounted for 29-30 per cent of the total sales during the quarter,he added.
During the quarter,the company said,cost of materials consumed was down to Rs 6,876.21 crore as against Rs 8,063.04 crore in the same period last fiscal.
“Material cost have come down by 3.5 per cent because of merger with SPIL,” Seth said,adding that royalty expenses in the quarter were at 6.1 per cent of net sales as against 6.9 per cent in the corresponding quarter last year.
Commenting on the outlook for volume growth for the year in the domestic market,he said it could be anywhere between 0-5 per cent.
He,however,declined to give any outlook on margins saying that “we have to see a variety of factors like volume,rupee-dollar equation and also we will put in efforts to reduce cost and increase localisation. There are so many variable that it is difficult to give outlook for margins”.
Seth said the inventory levels were manageable “but some inventory build up is required looking at the festive season”.
“With the third unit in Manesar to be operational from September,there will be headroom for capacity,” Seth said but added “if market remain where it is right now there will be capacity overhang.”
When asked if the current slowdown will affect plans for the Gujarat plant,he said: “We have some time to decide on the Gujarat plant. Board approval on Gujarat plant is still awaited. We are still in the process of getting approvals.”
On whether the company will advance the launch of its proposed compact SUV Alpha considering the success of Ford’s EcoSport,Seth said: “We are evaluating the product plans. It is not easy to prepone the launch. Let us wait and watch. We remain committed to one new model launch every year.”