The Hindu Business Line : Higher sales, cost cutting measures drive Maruti's Q3 net up 41 pc

MARUTI Udyog Ltd today reported a 41.5 per cent growth in net profit at Rs 339 crore for the quarter ended December 31, 2005, compared with Rs 239.66 crore earned in the corresponding quarter last year, aided by higher operational efficiency, cost reduction measures and increased vehicle sales.

The company, in which Suzuki Motor Corp holds the majority stake, said total income (net of excise) increased by 9.6 per cent at Rs 3,220.7 crore, as compared with Rs 2,938.3 crore in the same period last year.

"Our financial performance has improved on the back of growth in sales, better operational efficiency, reduction in costs, lower depreciation and a favourable macro-economic environment," the MUL Managing Director, Mr Jagdish Khattar, said.

He further said that the company had embarked on a new cost- reduction programme called `Next Leap'. "This will be spread over a three-year period and entail improving productivity and quality while reducing costs across all the processes," he said, adding that the cost-cutting initiative had helped the company improve margins in the first nine months of this fiscal.

Volume sales for the company in the October-December 2005 period stood at 1.45 lakh units, a growth of 6.5 per cent.

Meanwhile, MUL's profit in the first nine months of the fiscal stood at Rs 828.1 crore, a growth of 39 per cent over the Rs 594.1 crore earned in the same period last fiscal. Total income in the April-December 2005 period registered a 10.8 per cent growth at Rs 9,095.1 crore.

Mr Khattar said sales for the company in the domestic market beat the industry growth rate as volume sales moved up 8.2 per cent in the nine months of this fiscal at 3.8 lakh units (3.5 lakh in the previous corresponding period).

"As a result, we have been able to increase our market share by 1.6 per cent to 56.2 per cent during the April-December 2005 period," he said.

The company's depreciation costs, however, are likely to increase in the coming quarters due to higher investments. "We plan to spend Rs 2,718 crore in the next three years. This should result in higher depreciation," Mr Khattar said.

The company had earlier this month said it would invest Rs 2,718 crore by 2008 to introduce new car models and to fund research and development activities at its facility.

The latest investment is apart from the Rs 3,272-crore investment planned by Maruti and its parent company, Suzuki Motor Corp, in a new car manufacturing plant and a diesel engine facility. Maruti plans to launch five new cars in the next five years in the local market, including one by the end of this year. The new car is likely to be a diesel variant of the Swift.

The company's stock closed at Rs 707.35 on the BSE today, up 7.14 per cent over Thursday's closing.

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