Companies

Maruti Suzuki: Firing on all cylinders

Parvatha Vardhini C | Updated on: Jul 28, 2015

Successful launches and expanding margins have been supporting Maruti Suzuki in the last few quarters.

These factors have stood by the company in the quarter ended June 2015 as well.

In the three months ended June 2015, Maruti Suzuki’s top-line growth (18 per cent to ₹13,078 crore) was supported both by a 14 per cent growth in volumes and a 4 per cent increase in average realisations year-on-year.

An improved product mix from the addition of Celerio and Ciaz to the portfolio has helped push up realisations.

The company has also indicated lower sales promotion expenses in the quarter.

Other factors have also favoured the company at the operating level, taking operating margins to 16.3 per cent vis-à-vis 12.1 per cent a year ago.

Benign commodity costs and favourable forex movements have helped soften raw material costs.

The company imports about 15-20 per cent of its raw material requirements, predominantly from Japan.

Raw materials as a percentage of sales stood only at 68 per cent this quarter against 75 per cent a year ago.

With domestic vehicle sales on a cyclical recovery path, the good run is expected to continue. Improved consumer sentiments from lower inflation and interest rates can keep the double-digit volume growth ticking.

Besides, launches lined up in hitherto untouched segments will help further improve product mix, and hence, realisations and margins as well.

The company has already come out with its first crossover vehicle, the SX4–S Cross. The much-awaited compact SUV launch and launch of a premium hatchback car will also happen this fiscal.

The shifting product mix towards sedans and utility/crossover vehicles also means that the company will be less affected by the slowdown in rural sales, where cars with lower price points are more in demand.

Published on January 24, 2018

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