India's largest carmaker Maruti Suzuki India Ltd reported a 60% drop in its net profit this quarter - its worst financial performance in more than a decade - following a three-month labour unrest at its Manesar plant resolved only last week and sluggish demand.
The company registered a Rs 240.4-crore net profit in the quarter ended September 30 on the back of a 15.7% dip in net sales - even worse than the 54.3% profit dip the company witnessed in the peak of global recession between October and December 2008.
Maruti blamed unfavourable foreign exchange rate fluctuations, lower production and higher spend on discounts and promotions for the dip in profit.
"In the last three months, the yen has appreciated by over 20% that has made our imports from Japan more expensive, while we produced over 28,000 less cars due to the labour unrest at Manesar," said RC Bhargava, chairman, Maruti Suzuki.
Production loss due to the labour unrest at Manesar was estimated at 28,539 units.
Workers at the factory had gone on a strike in June, demanding recognition of an independent union.
Bhargava said, "Commodity prices have also gone up during the period and that did not help matters. This is still better than in 2000-01 when we registered a loss. We at least are in the black and though the market sentiment is down, our plants are back on track and we would do better from here on."
The quarter saw Maruti selling 252,307 cars, 19.6% less than the 313,654 units sold during the same period last year. Lower sales led to a 15.7% dip in net sales to Rs 7,537.5 crore.
"During the quarter, the domestic auto industry remained sluggish on account of increase in fuel prices and hardening interest rates, leading to higher sales promotion expense," the firm said in a statement.