Our Bureau The country’s largest passenger car manufacturer, Maruti Suzuki India (MSIL), has reported a standalone net profit of ₹1,882 crore for the fourth quarter ended March 31, up 10 per cent from ₹ 1,710 crore in the same period last year. The company said these are its highest ever numbers.
Net sales rose 14 per cent year-on-year (YoY) to ₹20,594 crore from ₹20,423 crore in the previous-year period. The results were in the expected lines of analysts.
Operating profit stood at ₹2,312 crore, a growth of 24 per cent from ₹1,859 crore in the same period in the previous fiscal, on account of higher sales volume, cost reduction efforts, partially offset by adverse commodity prices and higher advertisement expenses, the company said.
The company sold 4,61,773 vehicles during the January-March quarter FY18, up 11.4 per cent from the 4,14,439 units sold in same quarter in FY17.
For the full year, the company reported highest-ever net sales of ₹78,105 crore, up 17 per cent from ₹66,909 crore in FY17. The net profit for the year was also at a record high of ₹7,722 crore, against ₹7,350 crore last year.
“We have done better in all aspects during the year and we saw a double-digit growth (more than 14 per cent). The market share has gone up by 2.7 per cent. The royalty for the year has come down from 5.8 per cent to 5.4 per cent. But the commodity costs — like steel and aluminium — have grown ₹700 crore,” MSIL Chairman RC Bhargava told reporters here.
He further said there had been some unforeseen expenses and there was a lot of volatility in the quarter-to-quarter results due to policy changes such as GST.During the last financial year, the company’s tax expense stood at ₹3,282 crore, up 26 per cent from ₹2,610 crore in FY17.
Capex plans
MSIL said it has earmarked ₹5,000 crore for capex in the current fiscal. It plans to invest in various activities including new product development, engineering, maintenance of plants and network. The carmaker has also earmarked close to ₹1,000 crore to buy land parcels for new dealerships, Bhargava said.
The MSIL Chairman also said a new formula has been approved, which will result in lower royalty payment outgo for the company. Under the new formula, royalty will be calculated in rupee terms; there will be a discount on the royalty after a certain volume, and the expenses borne by MSIL in product development will also be reimbursed.
New royalty formula
“It has been applied to three new models already — Ignis, Swift and Dzire. We expect that by 2021, all Maruti models would come under this formula, resulting in the royalty percentage figure coming down from the current 5.4 per cent to 5 per cent,” he said, adding 5 per cent will remain as a cap.
Meanwhile, to commemorate the 35th anniversary of MSIL, the board has given its in-principle approval to establish an employee welfare fund, and a trust to promote scientific research and technology in India.
The company said that after formal approval by the board, the fund and the trust will be established later this year. Thereafter MSIL will contribute 1 per cent of PAT of the previous year each, to the fund and the trust.
The company said its board has recommended a dividend of ₹80 per share of face value ₹5 for FY18.
“We remain positive on MSIL’s growth story based on steady volume growth plus increase in passenger vehicle market share, incremental volumes from the Gujarat facility, ramp-up in rural demand and free cash flows. However, challenges persist in the form of increasing fuel prices, and slowdown in demand from cab aggregators such as Ola and Uber owing to cut down in incentives for car owners/drivers,” said Abhishek Jain, analyst at HDFC Securities.
Shares of MSIL closed at ₹ 8,777.95 on the BSE on Friday, down 1.90 per cent from the previous close.