Maruti's quarterly profits down, despite steady sales growth

In the face of the rupee’s recent slide against the yen, Maruti Suzuki’s net profit in the first fiscal quarter was down by 22.8%.

The rupee’s value against the yen has been on a steady drop; down from almost 1.7 yen in March 2012 to 1.4 yen currently. Japan’s Suzuki Motor Corp owns 54.2% of Maruti and car components are heavily imported from there, hence pushing up their manufacturing costs in recent months.

Net profit was down to Rs 423.77 cr from Rs 549.23 cr in same quarter last year, the fourth consecutive fall in quarterly net profit for India’s largest car manufacturer.

This, despite the fact that Maruti's net sales went up by 27.5% for the quarter. Growth of around 5% in both domestic and export markets was due to strong performances by the Swift, Dzire and Ertiga. However, other models like the Alto and WagonR are still performing below par, as the market continued to be skewed in favour of diesel cars.

Meanwhile, it looks like Maruti's woes are not seeing the end of the tunnel any time soon. The full impact of the indefinite Manesar lockout is yet to be felt. The Maruti camp must be experiencing a strong sense of déjà vu – last year’s unrest at the Manesar plant caused a production loss of about 80,000 cars, affecting their sales, profits and market share.

Daily losses due to the current lockout at Manesar have been pegged at 1,800 cars and Rs 90 cr.