Marginal rise in Maruti profit in June quarter

Our Bureau New Delhi | Updated on January 11, 2018

Hit by compensation to dealers for tax loss on GST transition, high marketing expense

Hit by the Goods and Services Tax (GST), Maruti Suzuki has posted a small 4.4 per cent increase in its net profit for the first quarter of the ongoing fiscal at ₹1,556.4 crore.

The company had seen a net profit of ₹1,490.9 crore during the same quarter ended June 30, 2016, of the previous fiscal.

In a statement the company attributed the results, which underwhelmed market expectations, to “adverse impact of rise in commodity prices… provision for compensation to dealers for tax loss due to transition to GST and higher marketing expense.” However, cost reduction by the company has offset some of the impact.

In comparison to the immediate quarter gone by the company’s profit has dipped 9 per cent. Further, in comparison to the fourth quarter of the previous fiscal (the quarter just gone by) net sales have also taken a hit of 4.8 per cent.

Maruti’s sales volume, however, has seen a 13.2 per cent increase year-on-year during the first quarter, primarily led by the domestic market which witnessed a 14.3 per cent increase in sales.

The company has also recorded a significant 17 per cent increase in total income during the quarter ended June 30, 2017, at ₹20,460.1 crore, from ₹17484.1 crore posted in the previous fiscal.

Interestingly, Maruti, which is known for its budget-friendly, affordable small cars, has seen the biggest growth in the utility vehicles segment (45.2 per cent) compared to the mini segment (11.6 per cent growth) and compact cars (17.5 per cent increase).

Maruti Suzuki’s scrip closed marginally higher by 0.19 per cent at ₹7,592.30 on the BSE on Thursday.

Published on July 27, 2017

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