New Delhi: Higher raw material costs and forex loss outweighed an increase in car sales for Maruti Suzuki, which witnessed an 18% fall in fourth quarter (January-March, 2008-09) net profit to Rs 243 crore against Rs 299 crore in the corresponding period of the previous financial year.
In Q4, total vehicle sales increased 17%. “The cumulative impact of the adverse forex exchange movement—both direct and via vendor imports— impacted our profit,” Shinzo Nakanishi, Maruti MD and CEO, said. Maruti made a provision of Rs 121 crore in Q4 for mark-to-market loss on dollarrupee derivatives, CFO Ajay Seth said, adding that the company has hedged one-third of its total foreign currency exposure as on March 31.
Raw material costs also grew substantially for the company at Rs 4,738 crore against Rs 3,694 crore in the fourth quarter of fiscal 2007-08, the company said, adding that prices have since softened and are likely to reflect positively in the first quarter of 2009-10.
Net sales for Maruti grew to Rs 6,308 crore, from Rs 4,763 crore in Q4 of 2007-08, registering a growth of 32%. The company’s net profit remained subdued for the full year as well (2008-09) which fell near 30% at Rs 1,219 crore against Rs 1,731 crore in 2007-08. However, Maruti’s net sales in the period rose 14% to Rs 20,358 crore against Rs 17,860 crore, led by models like the Swift and the Dzire. Total vehicle sales for the company in 2008-09 rose 3.5% at 7,92,167 units from 7,64,842 in 2007-08.
“Despite the revival in the fourth quarter of the last fiscal, future still looks uncertain. Experts have presented different growth projections. We foresee 2009-10 to be another volatile and difficult year,” Nakanishi said. Maruti has also started sale of A-Star compact to Nissan as part of contract manufacturing, he said. “We have shipped 2,000 units. Full year sale to them is expected at 30,000 units,”
WHAT WENT WRONG? Maruti MD and CEO Shinzo Nakanishi
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