| |
Depreciation
hurts Maruti |
| |
|
| |
The Telegraph
New Delhi: India's top car maker Maruti Suzuki has registered a 34 per
cent fall in quarterly net profit, its first decline in five years, on
higher depreciation and loss from its investments in derivatives.
The company, in which Japan's Suzuki Motor has a majority stake, is also
considering raising prices of its cars as steel has become costlier.
"Steel prices are rising and ideally we will pass it on to customers,"
said Mayank Pareek, executive officer (marketing and sales) of Maruti.
He, however, did not disclose the extent of the imminent price hike.
Maruti managing director S. Nakanishi said the company was negotiating
new contracts with steel companies, who are demanding a 40 per cent
price hike.
The company had last increased prices by Rs 1,000-11,000 (ex-showroom,
Delhi) of most of its models in February.
It, however, reduced prices of six models following the excise duty
reduction in this year's budget on small cars to 12 per cent from 16 per
cent.
Prices were reduced for the Maruti 800, Omni, Zen, Wagon R, Swift Diesel
and the Alto in the range of Rs 6,500-18,030.
Maruti's net income for the three months ended March 31 fell to Rs 298
crore, or Rs 10.3 a share, from Rs 449 crore, or Rs 15.53 a share, a
year earlier.
However, the company posted a 10.8 per cent higher net profit in 2007-08
on a 23.4 per cent rise in revenue. It reported a net profit of Rs 1,790
crore compared with Rs 1,588 crore a year earlier. Total revenues,
including sales, rose to Rs 19,121 crore from Rs 15,489 crore.
Unlike Maruti, the net profit of Suzuki grew 7 per cent to $775 million
for the year ended March 2008.
Maruti, which will pay a final dividend of Rs 5 a share, said net income
wasn't comparable year-on-year because of a more "stringent depreciation
policy adopted voluntarily by the company".
Depreciation in the fourth quarter surged to Rs 311 crore from Rs 71.82
crore.
"For a tighter and more prudent financial reporting, the company has
voluntarily adopted shorter depreciation cycles for its equipment and
tooling assets," said Ajay Seth, chief general manager of finance.
He said the full depreciation for equipment and tooling assets would be
eight years instead of 13 years previously. The depreciation for dyes
would be four years instead of five. |
|