Maruti Suzuki India on Friday reported a 35.46 per cent decline in its net profit at Rs.800.05 crore for the fourth quarter ended March 31, 2014, due to lower volumes and higher sales promotion expenses. It had reported a profit of Rs.1,239.62 crore in the year-ago period. Net sales declined by 9.48 per cent to Rs.11,818.13 crore from Rs.13,056.26 crore.
“The lowering of profit in the fourth quarter was partly due to dealer compensation due to excise duty cut,” R. C. Bhargava, Chairman, told reporters here, adding the compensation to dealers worked out to Rs.143 crore. Sales volume dropped 5.48 per cent to 3,24,870 vehicles during the quarter.
DividendThe company’s board recommended a dividend of Rs.12 per share of the face value of Rs.5 each for 2013-14.
For the whole of 2013-14, the company reported a higher profit of Rs.2,852.92 crore against Rs.2,469.28 crore in 2012-13. Its previous highest annual profit was in 2009-10, when it had posted earnings of Rs.2,497.6 crore. Net sales stood at Rs.43,271.78 crore in 2013-14 against Rs.43,215.83 crore.
“Despite a declining market, we could increase our annual profit on the back of our cost reduction and localisation initiatives, together with favourable foreign exchange,” Mr. Bhargava said.
Annual sales stood at 11,55,041 units, a drop of 1.4 per cent from 11,71,434 units in 2012-13.
The company is looking to “at least” maintain the level of sales in the current financial year, Chief Operating Officer (Marketing and Sales) Mayank Pareek said. With exports declining, Mr. Pareek said the company was exploring how to develop markets in Africa and the Middle East to expand overseas sales. Maruti’s exports in FY14 were down at 101,352 units from 120,388 units previously.
The company is expected to launch three cars this financial year, including the premium sedan Ciaz. Maruti Suzuki shares fell 1.35 per cent to Rs.1,956.05 at close on the BSE on Friday.
On the much-talked about Gujarat plant, Mr. Bhargava said the process of finalising all contractual agreements and getting shareholder approval might take place after August-September. With the change in the conditions for investment at the plant, as no mark-up on vehicles would be charged by Suzuki Motor to Maruti, the Japanese parent would double its equity infusion, which would be about Rs.3,000 crore, he added. This will be over and above the initially planned investment of Rs.3,000 crore.
“We need to check the position on tax liability or even litigation and once we finalise the contract manufacturing agreements, we will hold a road show and meet up with shareholders,” Mr. Bhargava said.
