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New Delhi, July 21 Maruti Suzuki, the country’s top car maker, posted a drop in net profit despite higher sales, mainly on account of a sharp increase in raw material prices and a shift to a new depreciation policy.

The company posted a 7-per cent decline in net profit at Rs 465.8 crore during the first quarter of the current financial year.

The company, however, said that the figures were not comparable due to the impact of Rs 61 crore, resulting from the new depreciation policy introduced in the last quarter of the previous financial year.

The new depreciation policy will reduce the life span of its tools and equipment to eight years from 13 years. Maruti is expecting that the recurring impact of this policy would be felt in the coming few years.

In addition, the company is estimating a net unrealised loss of Rs 134 crore from hedging in derivative instruments for the current fiscal, out of which the impact for the current quarter stands at Rs 18 crore, said a company official.

However, fuelled by robust sales in the premium compact car segment and a higher share in the sedan segment underpinned by its models such as SX4 and DZire, Maruti’s net sales rose 17 per cent in the quarter ended June 2008.

Domestic sales grew by 12.1 per cent to 1,80, 093 units led by compact hatchback Swift, entry level sedan Swift DZire and WagonR.

In the premium segment, Maruti’s share inched to 26.4 per cent with SX4 and DZire, up from 21.2 per cent in the same period last year.

Maruti launched two new models in the sedan segment - SX4 in March last year and DZire, the entry level car on the Swift platform.

Besides, sales zoomed in the export market. Maruti’s overseas sales jumped 37.8 per cent to 12,491 units in the first quarter of FY2008-09 as against 9,065 units last fiscal. The company’s share price closed on the BSE at Rs 648.20, 3.5 per cent higher than the day’s opening price of Rs 625.

More Stories on : Financial Performance | Cars | Maruti Udyog Ltd

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