Jan 30, 2012
Maruti Suzuki, India's biggest carmaker, reported a bigger-than-expected fall in quarterly profit as the company struggled with a sales slowdown and high import costs caused by a weaker rupee.
High interest rates and rising fuel costs have curbed once-soaring car sales in India, as first-time buyers typically reliant on loans balk at the high cost of purchase and ownership.
Amid slowing sales, which the industry's trade body said this month would only grow between 0-2 per cent in the year to end-March, rising input prices have tightened margins at automakers, whose sales grew 30 per cent in the previous fiscal year.
Maruti, 54.2 per cent owned by Japan's Suzuki Motor Corp, saw sales plunge 28 per cent in the fiscal third-quarter ended December, because of a slowdown in small-car sales -- its key product -- while recovering from labour unrest last summer.
"Sales in the quarter were impacted by sluggish market conditions caused by higher fuel prices and interest rates," the company said on Monday.
The strikes which shut down its factories in Manesar for weeks at a cost of over $500 million, resulted in a production loss of 40,000 vehicles during the quarter, Maruti said.
Profit fell 63.6 per cent to Rs 2.06 billion in the December quarter from Rs 5.65 billion a year earlier, while sales dropped to Rs 76.6 billion from Rs 92.8 billion.
Analysts expected net profit of Rs 2.35 billion, according to Thomson Reuters I/B/E/S. The carmaker, which produced every other car sold in India this time last year, may struggle to post a rise in sales volume in the fiscal year that ends in March, its chairman has said.
A weakened rupee, which fell by around a fifth from its high in July, also hurt Maruti's profits by increasing the cost of imports.
In an effort to offset rising costs, Maruti followed domestic rivals Mahindra & Mahindra and South Korea's Hyundai Motor with a price increase across its range by up to 3.4 per cent last week.
Shares in Maruti, valued at $6.4 billion by the market, rose 1.5 per cent after the results were announced after trading in the red earlier.
Reuters
New Delhi
