The Hindu Business Line : Maruti profit rises three-fold to Rs 542 cr

Maruti's total income in the fourth quarter was at Rs 2,987.03 crore, which is a 33 per cent rise as compared with Rs 2,247.58 crore in the same period in 2002-03. Net profit for the January-March period stood at Rs 157.15 crore, up 193 per cent over Rs 53.68 crore in the same period previous year.

Commenting on the company's financial performance, Managing Director of Maruti Udyog Ltd, Mr Jagdish Khattar, said, "It has been a landmark year for Maruti, with all-time high sales and exports. Our new businesses have become fully operational. We revamped our sales network. Our dealerships grew in confidence and invested in new outlets and service facilities. Owing to aggressive cost reduction efforts within Maruti and among suppliers, we have been able to bring down total raw material costs, despite the sharp increase in price of steel and the adverse impact of a stronger yen. Better inventory management has also improved margins."

However, market officials pointed out that the company's profitability was lower than expectation in the fourth quarter.

"This was basically due to two reasons. Due to changes in the accounting policy of the company, the depreciation in the quarter was much higher. Secondly, the `other expenditure' of the company increased significantly on account of higher advertising costs," Mr Ashish Jagnani of HDFC Securities, said.

Incidentally, helped by low interest rates on car loans as well as a reduction in prices of some of its models, Maruti sold 4,72,122 vehicle units during 2003-04, the highest since the company began operations 20 years ago. Maruti's annual sale in 2003-04 represents a growth of 30 per cent over 2002-03.

While sales of the company's bread-and-butter model, Maruti 800, grew by 17 per cent in 2003-2004, it was the compact car Alto that turned out to be a volume driver growing by over 130 per cent in the year.

The company had also introduced upgraded versions of the WagonR and Zen during the year.

According to a company statement, the year also saw Maruti take the first steps towards its goal of becoming Suzuki Motor Corporation's R&D hub for Asia outside Japan, with the introduction of the upgraded versions of WagonR and Zen.

Meanwhile, following the announcement of the annual results and the setting up of an engine plant by the company, Maruti's stocks jumped by 11.79 per cent on the Bombay Stock Exchange (BSE) to close at Rs 447.15.

To set up diesel engine plant

MARUTI Udyog Ltd has said it would invest Rs 350 crore to set up a new facility to manufacture diesel engines for cars.

The new facility will have capacity to manufacture one-lakh diesel engines annually and will begin production in 2006. It would manufacture a 1.3 litre diesel engine that will be used to power both compact and mid-size segment cars.

According to a Maruti statement, Suzuki Motor Corporation, the parent company of Maruti Udyog Ltd, had recently entered into a product license agreement with Fiat Auto and Adam Opel to obtain technology for the manufacture of a 1.3 litre, advanced diesel engine based on the Common Rail Injection System.

The decision to set up a facility in India has been undertaken to meet the growing demand for diesel engine cars in the domestic market, the statement added.

Announcing the investment, Mr Khattar said: "Our decision to invest in a new facility to manufacture diesel engines underlines our parent, Suzuki Motor Corporation's continued commitment to India. It is in keeping with Maruti's strategy of providing suitable products for diverse segments of customers. We are confident that by setting up an advanced facility to manufacture diesel engines, we will be able to meet this demand of customers as well."

Currently, the company is offering diesel engine options for the Zen and the Esteem. The two cars feature the Peugeot TUD5 engine that the company has been importing.