Maruti Suzuki's Q4 net vaults nearly 80% on yen fall

Maruti Suzuki's Ltd, India's top carmaker, today reported exceptionally strong results for fiscal fourth quarter (January-March 2012-13) at Rs1,147.5 crore, a 79.8 per cent increase from the year-ago quarter.

Net profit, including effects of merger, stood at Rs1,239.6 crore. During the year, Maruti Suzuki merged Suzuki Powertrain India Limited (SPIL) with itself. Results for the fourth quarter include the effect of the merger of SPIL for the full year.

The board of directors of the company approved a dividend of 160 per cent (Rs8 per share of face value Rs5) for 2012-13, against the 150 per cent dividend paid in 2011-12.

Maruti Suzuki (India) Ltd, which is majority-owned by Japan's Suzuki Motors, said profit margins are set to show even stronger gains in the current quarter (April-June 2013) as cost of yen-denominated component imports fall further.

During the quarter, the company also recorded net sales (net of excise) of Rs12,566.6 crore, an increase of 9.4 per cent over the comparable figure in the same period of the previous year. Including the effect of the SPIL merger, net sales stood at Rs13,056.2 crore.

Net profit for the financial year (April 2012-March 2013) rose 40.6 per cent to Rs2,300 crore compared to the previous financial year. Net profit, including the effects of merger stood at Rs2,392.1 crore.

Cheaper imports of parts in the wake of Prime Minister Shinzo Abe's campaign for bold monetary easing and reduced royalty payment to parent Suzuki Motor Corp helped the company post an 80 per cent rise in January-March net profit.

The company also benefited from robust sales of its Ertiga multi-purpose vehicle and new models such as Ertiga, DZire and Swift, as also cost reduction and localisation efforts and the favourable exchange rate.

"Indirect costs are on a quarter lag, so you have not seen the full impact of the indirect import benefit," chief financial officer Ajay Seth told analysts during a conference call.

The yen was valued at an average 94 to the dollar during January-March this year, while it is currently trading at around 98.

The yen, however, has weakened further since the end of the quarter and is likely to soften further if Japanese investors shift funds abroad in search of higher returns.

Maruti Suzuki spends around a quarter of its net sales on yen-denominated imports and royalties to Suzuki.