Better domestic sales and cost-reduction measures help Maruti Suzuki India report a 29 per cent rise in its standalone net profit for the second quarter of the current fiscal at ₹862.54 crore against ₹670.23 crore a year ago.

The country’s largest passenger carmaker reported a 17.5 per cent increase in sales at ₹11,996.3 crore, compared with ₹10,211.83 crore in the year-earlier quarter, the company said here.

Maruti’s board also recommended increasing foreign institutional investors’ (FII) limit to 40 per cent, broadly at the level of public shareholding in the stock. The company said this is subject to shareholder approval in a general meeting and subsequently the request will be sent to the Reserve Bank of India for notification.

The FII shareholding in Maruti Suzuki was limited to 24 per cent earlier as per the Foreign Exchange Management Regulations, 2000, and the consolidated foreign direct investment policy of the Government of India.

On the company performance, RC Bhargava, Chairman, told reporters here: “There is a growth of 17 per cent in sales since the last one year and we are growing better than the industry. The situation is not as bright as many in the industry had hoped for. Without us, the industry growth will be in negative territory.”

Going forward, the company would continue to grow beyond the industry growth rate and expects to close this financial year with over 10 per cent sales growth.

Slower second half However, he added the second half would be lower than the first half in terms of growth rate because of a higher base in the second half last year.

Bhargava said the Board has also decided to keep the dividend payout ratio between 18 per cent and 30 per cent. It was earlier ranged at 10 to 15 per cent.

The actual dividend for each year would be decided by the Board, taking into account the availability of cash, the profit of the year and requirements of capital investments.

Volume Maruti sold a total of 3,21,898 vehicles during the July-September period against 2,75,586 units last year, reporting a growth of 16.8 per cent.

Of this, exports were at 34,211 units, it said. There was a cash reserve of ₹9,000 crore as of September 30 and the carmaker has earmarked an investment of ₹4,000 crore this year.

According to analysts, the results were ahead of their expectations.

“We expect the domestic passenger car demand to stay strong over the next couple of years. Recovery in the entry level car segment, and new launches will be the key volume growth drivers for Maruti Suzuki,” Arun Agarwal at Kotak Securities said.

The stock of Maruti Suzuki closed at ₹3,242.15 on the BSE on Thursday, up 1.14 per cent.

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