Operating profit up 9.9%; Net profit rises by 15.8%
Maruti Suzuki India, the country’s largest passenger vehicle manufacturer, reported a 20.3 per cent increase in its revenues in the March 2017 quarter. The company’s operating profit grew by 9.9 per cent and net profit by 15.8 per cent. The company attributed the rise in profits to healthy growth in volumes, increase in share of the company’s higher segment models, benefits due to full capacity utilization and cost reduction efforts.
During the quarter, the company sold 414,439 vehicles indicating a growth of 15 per cent. Of this, exports stood at 31,771 units. The company sold more units of its popular models Baleno and Vitara Brezza.
However, increase in commodity prices and adverse forex movement partially impacted the financial performance during the March 2017 quarter. During the period, raw material expenses of the company increased by 29.4 per cent, faster than the sales growth. Wage bills and total other expenses of the company grew by three per cent and 6.3 per cent, respectively.
The company reported a pile-up of inventory of Rs.5.3 billion during the quarter as compared to Rs.2.1 billion in the year-ago quarter. Operating expenses corresponding to cost-of-goods sold increased by 22.1 per cent, out-pacing the growth in sales. Therefore, operating margin of the company contracted by 130 basis points to 14 per cent.
Among the post-operating expenses, depreciation charges and tax provisions of the company fell by 7.8 per cent and 6.3 per cent, respectively. However, this was negated by a 17.4 per cent decline in other income. As a result, net margin of the company contracted by 30 basis points to 9.1 per cent.
Credit – Industryoutlook
