Auto India, Car India

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The leading carmaker Maruti Suzuki failed to follow two-wheeler companies in terms of gaining huge profits in the third quarter since Forex losses and there is a reduction in year-on-year profit by almost 64%. It has been reported by the company that a net profit of almost Rs 206 crore in the quarter ended 31 December 2011 in opposition to nearly Rs 565 crore in the similar period last financial.

It has been observed that the sales level of the company has been reduced by 28 percent in the October-December 2011 quarter since the demand was greatly hit in the domestic market because of a few negative points affecting the car industry and by crippling hits at the Manesar plant of Maruti.

“Unit sales in the quarter were impacted by sluggish market conditions caused by higher fuel prices and interest rates. Additionally, the company lost around 40,000 units in production due to the industrial relations problem at Manesar,” the company said.

Maruti’s poor showing comes in after both the companies Bajaj Auto as well as Hero MotoCorp got a double-digit expansion in gains going on huge sales. For the leading carmaker of the country Hero MotoCorp, profit was more than 43 percent at Rs 613 crore against Rs 429 crore in the equivalent duration of the earlier year. The profit for Bajaj Auto was more than 19 percent at Rs 795 crore against Rs 667 crore in the similar duration of the earlier year.

In spite of the slow earnings, shares of Maruti Company ended the day higher on Bombay Stock Exchange at Rs 1183 more than 5.7 percent. For Maruti Company, net sales incomes was reduced by almost 17 percent at Rs 7664 crore against Rs 9,277 crore in the third quarter of the earlier fiscal. In a conference call by company, officials with investors were cautious on the outlook. Another thing that greatly hit the profits of the company is the decline of the rupee since it has made its imports directly and indirectly through vendors. Rupee decline has greatly affected the parent Suzuki Company as well.

“The year on-year forex impact in the quarter was to the tune of Rs 200 crore. This was on account of direct and indirect imports, royalty outgo, and reinstatement of liabilities partially offset by export gains,” Maruti CFO Ajay Seth said. The company said it is hedging forex exposure not only for itself, but also for vendors.

The bigger capital profits of almost Rs 160 crore in Q3 came to the rescue of the company. The profit was nearly Rs 130 crore in the similar duration earlier year. The net gains of the Maruti Company in 9 months ending 31 December 2011 was reduced by nearly 39 percent at 995 crore against Rs 1629 crore in the similar period of the earlier fiscal. The net sales of almost Rs 2353 crore has been recorded by the company and a reduction of 10 percent over the similar duration in the earlier year.