Maruti Suzuki Q1 falls 7 pc

Maruti Suzuki Q1 falls 7 pc
21 Jul, 2008, 1855 hrs IST, REUTERS

MUMBAI: Maruti Suzuki India Ltd, the country’s top car maker, reported a 7 per cent fall in quarterly net profit on Monday as high costs of raw materials and a new depreciation policy outweighed a rise in sales.
Maruti, 54.2 per cent owned by Japan’s Suzuki Motor Corp, said net profit fell to 4.66 bn rupees ($109 mn) in the fiscal first quarter to end-June, from 4.99 bn rupees in the same period a year earlier. That beat a poll forecast of 4.55 bn rupees.
Maruti, which recently adopted shorter depreciation cycles for its equipment and tooling assets, has nearly half the Indian car market, with models such as the best-selling Alto and Swift hatchbacks.
Its sales rose 13.5 per cent in the June quarter.
But the rising cost of inputs have hit margins, while high interest rates and a fuel price hike have dented demand. It is also facing greater competition from rivals such as Hyundai Motor and General Motors.
Local rival Tata Motors plans to launch the Nano, a car priced at just above $2,500, later this year, which is expected to take a significant share of the small car market. Shares in Maruti, which has a market value of about $4 bn, fell 26 per cent in the quarter, compared to a 21 per cent fall in the auto index and a 14 per cent decline of the key index.