Driven by robust sales, cost reduction and forex gains, the country's largest carmaker Maruti Suzuki India on Thursday reported 20.69% increase in net profit at Rs. 762.28 crore for the first quarter ended June 30, 2014-15.
Private security guards stand in front of the main gate of the Maruti Suzuki Production Facility in Manesar. AFP
It had posted net profit of Rs. 631.60 crore in the same period of 2013-14, MSI said in a statement.
Net sales during Q1, 2014-15 stood at Rs. 11,073.51 crore, up 10.78% as against Rs. 9,995.12 crore in the April-June quarter of last fiscal.
"We started the quarter with low consumer sentiments, high inflation and other economic factors that affected the economy last year but after elections consumer sentiments changed and turned positive," MSI chief financial officer Ajay Seth said in a conference call with analysts.
With return of the first-time buyer post-elections, the company's top selling model Alto crossed the 30,000 mark in June, while WagonR went past the 17,000 market for the first time, he said.
MSI sold 2,99,894 vehicles during Q1, a growth of 12.6% over the year-ago period.
Sales in the domestic market stood at 2,70,643 units, up 10.3%. Exports were at 29,251 units, up 38.7%.
The company said its cost reduction and localisation initiatives, growth in volumes and favourable foreign exchange helped improve the bottomline during the quarter.
Seth said there was "an impact of Rs. 150 crore" in the first quarter due to forex gains.
Also, the company has made significant progress through its localisation programme thereby reducing import content.
"Our total content as on March 31, 2014 as percentage of net sales was at 16%, which has significantly come down from around 25-26% 2010-11 onwards," he said.
On the recovery in the market, Seth said the current traction seen in sales is mostly sentiment driven and the real growth will come only when there is all around economic growth with investments coming into the country and jobs being created.
"So far the recovery in the market is sentiment driven and discounts during the quarter were the highest at around Rs. 21,000 per car. Discounts will go once we see genuine demand coming in," he said.
On the royalty payment to parent Suzuki Motor Corp, he said for the quarter it was Rs. 689 crore.
Revenue from exports were at Rs. 1,243 crore as against Rs. 907 crore in the same period last fiscal, he said.
When asked about sales forecast, he said company was looking at "early double digits" growth for the domestic market, while exports are expected to remain flat.
During the quarter, MSI saw its rural sales grow by 26%, while that of the urban market was 13%.
The MSI scrip ended the day at Rs. 2,524.50 per scrip, down 1.07% from the previous close on the BSE.