Maruti in top gear,profit triples

Maruti Suzuki India,which sells one of every two cars in India,reported a quarterly net profit of Rs 688 crore,more than tripling from a year earlier and beating forecasts.

Maruti Suzuki India,which sells one of every two cars in India,reported a quarterly net profit of Rs 688 crore,more than tripling from a year earlier and beating forecasts. The company said the higher sales were in part due to the lower base effect of the same period a year,a boost in demand from the governments stimulus packages and easier availability of credit. Maruti also said it will invest Rs 1,700 crore to expand the production capacity at its Manesar plant by 2.5 lakh units annually by 2012.

The company posted a net sales of Rs 7,333.77 crore for the December quarter,up 62.51 per cent from Rs 4,512.64 crore in the same period previous fiscal,while its vehicle sales were at 2,18,910 units,up 37.8 per cent from the same quarter a year ago. The percentage growth (221.9 per cent) in net profit is perhaps the highest ever,although it is aided by the low base effect of last year. The sales volume and turnover are also the highest that we have achieved in a quarter, company chief Financial officer Ajay Seth said.

The robust performance was aided by favourable conditions in the domestic market such as support by the governments stimulus package and ease of automobile finance,it said. Favourable exchange rate on exports to Europe,declining raw material costs and better product mix also contributed in our better bottomline, Seth said.

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Exports during the quarter grew by over 167 per cent to 39,116 units compared to 14,634 units in the year-ago period. Seth said after investing Rs 1,700 crore to expand its capacity,the companys total annual capacity will be 1.25 million by 2012. Maruti,in which Japans Suzuki Motor Corp has a 54.2 per cent stake,currently has a production capacity of 1 million units.

On the outlook for the remaining quarter of the fiscal and the year ahead,the company said it remains cautiously optimistic about sales volume in the current quarter. The margins would be under pressure due to introduction of BSIV technology in the large volume models and hardening of commodity prices. The focus on cost reduction and Kaizen in operations continues, the company said.

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Maruti Suzuki

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