Country’s largest car maker Maruti Suzuki India on Thursday posted a growth of 28.7 per cent in net profits to Rs 862.5 crore for the second quarter ended September 30, 2014. The profits were driven by growth in domestic sales and cost reduction initiative, which helped mitigate rise in raw material costs.
The company had reported net profit of Rs 670.2 crore in July-September quarter last fiscal.
The Board of the company today recommended an increase in the FII limit to 40 per cent from 24 per cent, subject to shareholder approval and RBI nod. Additionally, the board approved adopting a guideline for dividend payout ratio within the range of 18-30 per cent.
Post the announcements, the company scrip ended higher by 1.14 per cent on the BSE at Rs 3,242.15.
During the quarter under review, net sales rose 17.47 per cent to Rs 11,996.3 crore from Rs 10,211.8 crore in the year-ago period. Maruti Suzuki India sold 3,21,898 vehicles in July-September 2014, up 16.8 per cent.
Talking to reporters about the industry, the company's Chairman R C Bhargava said, “The situation is not as bright as many had hoped for. Maruti has had a better growth in the first half of the year but industry as a whole is not doing good. Without us, the industry growth will be in the negative territory.”
Maruti Suzuki India's net profit during the first half of the 2014-15 fiscal stood at Rs 1,624.8 crore, up 24.8 per cent, while net sales grew 14 per cent to Rs 23,069.8 crore. During the six month period ended September 30, 2014, the car maker sold 6,21,792 vehicles, an increase of 14.7 per cent.
On guideline for dividend, he said a policy by the current Board cannot be binding on future Board. “The actual dividend for each year would be decided by the Board taking into account the availability of cash, the profit level that year and the requirements of capital investments,” he added.
On increasing the FII limits, he said a lot of domestic and foreign investors had told the company that the 24 per cent cap was “an unnatural restriction to buy and sell the company's shares freely and if the limit is increased minority shareholders can also benefit as trading in shares will increase.”
When Maruti Suzuki India was listed in 2003, FII shareholding was limited to 24 per cent as per the Foreign Exchange Management Regulations, 2000 and FDI policy. This limit was reached about a year and a half ago, the company said.
The company is, however, yet to decide on a final date for the minority shareholders' voting to let parent Suzuki Motor Corp own and invest in the Gujarat plant, which has been slated to be commissioned in May-June 2017.
