Maruti Q1 net dips 20.3% to 465 cr
In a clear sign of competition making a dent into its stranglehold over the domestic car market, Maruti Suzuki on Saturday reported a 20.3 per cent fall in net profit at Rs 465 crore for the first quarter ended June 30.autos Updated: Jul 25, 2010 23:09 IST
In a clear sign of competition making a dent into its stranglehold over the Indian car market, Maruti Suzuki on Saturday reported a 20.25 per cent fall in net profit at Rs 465.36 crore for the quarter ended June 30.
This is the first time in five quarters that the company has reported a decline in its net profit after record breaking numbers in 2009-10 fiscal.
The company had posted a net profit of Rs 583.54 crore during the corresponding period last fiscal, Maruti Suzuki India (MSI) said in a statement.
The last time the company's net profit dipped was in the fourth quarter of 2008-09, when it posted a profit of Rs 465.85 crore, down 6.5 per cent from the year-ago period.
MSI attributed the decline in net profit for the first quarter of 2010-11 to mainly high commodity prices and increased royalty to its parent Suzuki.
"The drop in net profit is due to higher commodity prices, increase in royalty and lower 'other income'. In addition, income from exports to Europe fell due to weakening of the euro," the company said.
During the quarter, the company's market share also declined to 47.59 per cent from earlier over 55 per cent in the 15 lakh units per annum domestic passenger car segment. It had sold 2,06,377 units during the quarter in a total market of 4,33,641 units.
In the first quarter of this fiscal, total income from operations, however, increased by 26.78 per cent to Rs 8,231.53 crore from Rs 6,493 crore in the year-ago period.
The company said while cost of raw materials went up to Rs 6,079.72 crore from Rs 4,827.34 crore in the year-ago period, its other income during the April-June period declined at Rs 100.20 crore compared to Rs 216.53 crore.
"Following regulatory amendments, the company has during the quarter accrued for royalty expense in accordance with the various royalty agreements entered into with Suzuki Motor Corp resulting in an additional royalty expense of Rs 188.70 crore including Rs 65.15 crore for the period December 16, 2009, to March 31, 2010," it added.
The company, however, did not disclose the royalty payments in the comparable period of the previous fiscal.
MSI's decline in net profit in the Q1 of this fiscal is in contrast to 105 per cent jump in 2009-10 fiscal when it had posted a bottomline of Rs 2,497.6 crore. Its total sales had also jumped 40 per cent to Rs 30,119.7 crore over the previous fiscal.