The Board of Directors of Maruti Suzuki
India Limited today approved the financial results for the period July-September
2014-15 (Q2) and April-September 2014-15 (H1).
The Company sold a total of 321,898 vehicles in Q2, a growth of 16.8 per cent. Of
this, exports were at 34,211 units.
The Company’s net sales was Rs 119,963 million, a growth of 17.5 per cent over the
same period of the previous year.
Net profit in Q2 stood at Rs 8,625 million, up 28.7 per cent compared to the same
period last year.
Growth in domestic sales and cost reduction initiatives by the Company contributed
significantly to bottomline growth during the quarter.
The Company sold a total of 621,792 vehicles in H1 a growth of 14.7 per cent. Of
this, exports were at 63,462 units, a growth of 15.2%.
The Company’s net sales was Rs 230,698 million in April-September 2014, a growth
of 14.2 per cent over the same period last year.
Net profit stood at Rs 16,248 million, up 24.8 per cent.
Higher volume contributed to profits. Cost reduction initiatives helped to mitigate
increase in raw material costs.
Background: Maruti Suzuki India Limited was listed in 2003. At that time,
the Foreign Institutional Investors (FII) shareholding in MSIL was limited to 24%
as per the Foreign Exchange Management Regulations, 2000 and the consolidated Foreign
Direct Investment (FDI) Policy of the Government of India. This limit was reached
about a year and a half ago.
As a result of this, Maruti Suzuki went out of the MSCI index where the availability
of room to buy shares is a precondition in the Index. Many global funds benchmark
with this index and their shareholding in a particular stock depends to some extent
on the weightage of the stock in this index. This has a bearing on the stock price
of the company also. Additionally, the FII limit is restricting the ability of both
domestic and foreign investors to buy and sell shares of the company.
The Board of Directors considered the matter and decided to recommend an increase
in the FII limit to 40%, broadly the level of public shareholding in the stock.
This is subject to shareholder approval in a general meeting and subsequently request
to RBI for notification.
Background: Many shareholders have opined that the company should provide
a dividend policy in the interest of providing greater transparency to the shareholders.
The Board, at the time of approving the annual accounts in each year, also decides
the dividend to be paid to the shareholders depending on the context of business
in that year. A policy stated by the current Board cannot be binding on future Board.
However, the current Board can form a guideline on dividend payout in future in
the interest of providing transparency to shareholders.
The Board accordingly approved the following guidelines for dividend payment:
The Company would endeavour to keep the Dividend payout ratio, except for reasons
to be recorded, within the range of 18% to 30%. The actual dividend for each year
would be decided by the Board taking into account the availability of cash, the
profit level that year and the requirements of capital investments.