Car industry leader Maruti Udyog profits jump 31% | business | Hindustan Times
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Car industry leader Maruti Udyog profits jump 31%

Car manufacturers Maruti Udyog's profit surges up by 31.4 per cent from the previous financial year, reports Deepak Joshi.

business Updated: Apr 25, 2007 00:17 IST

Car industry leader Maruti Udyog on Tuesday posted a net profit of Rs. 1,562 crore in 2006-07 compared to Rs 1,189 crore in 2005-06, up by 31.4 per cent. Total income for the financial year stood at Rs 15,252.3 crore (net of excise), growing 22.2 per cent over the previous financial year.

In the fourth quarter, Maruti reported a 24.3 per cent jump in net profit at Rs 448.60 crore over January-March 2006. Total income (net of excise) grew 36.60 per cent to Rs 4,634.70 crore during the quarter over the same period of the previous financial year.

The company board also recommended a dividend of 90 per cent. For 2005-06, the company had announced 70 per cent dividend.

The record profit is on the back of a 20.13 per cent jump in sales at 674,924 in the financial year, including exports of 39,295 automobiles. Besides launching the WagonR Duo and the stylish Zen Estilo during 2006-07, the company entered the diesel segment with the Swift Diesel.

"Our single model Alto sold more units in 2006-07 in the domestic market than the combined sales of all models of our nearest rival," Maruti Managing Director Jagdish Khattar said.

The company said it would be launching two models in the current financial year. However, there is concern over hardening interest rates and other macro policy initiatives impacting the performance of the company. "There is a challenge ahead of higher interest rates… Finance is an important tool to expand the market," Khattar said, justifying the reduced interest rate offers being put out by the car maker.

Outlining the company's strategy to sustain demand, he said, "The interest rate is not in our control. It is our duty to bring customers to the market. We have to bear the cost of low interest rate offers, a large part of it."

Khattar dismissed as inconsequential the impact of Tata Motors' Rs one lakh car on Maruti. "Its impact will be on two-wheeler sales and not on us," he pointed out.

In such a scenario, the Maruti managing director said the company would seek to improve productivity, reduce costs and improve per unit realisation. "We do not seek to reduce prices of components, but reduce costs for our suppliers," he added.

Maruti is expected to unveil SX4, a sedan aimed at replacing its premium offering Baleno, and the latest version of the sports utility vehicle Vitara. The SUV will be imported as completely built units.