Maruti Q2 profit up 60% on record sales
Positive market sentiment, good monsoon, new products, high payouts by Seventh Pay Commission aid growth
Riding on record sales, country’s largest carmaker Maruti Suzuki India on Thursday posted 60.18% jump in net profit to ₹2,398 crore for the quarter ended September 30, its “best ever” quarterly profit.
The growth came on the back of positive market sentiment, good monsoon, new products and jump in salaries after the seventh pay commission. New products such as the Baleno premium hatchback and the Vitara Brezza SUV – both continue to have a long waiting period.
In the quarter, revenue grew by 29.28% to ₹20,296.8 crore during the second quarter of the current fiscal. The average price of the cars also increased, which meant more people bought cars at a higher price – a trend the carmaker has been witnessing for over a year.
The company sold 4,18,470 vehicles during the quarter under review, a growth of 18.4% over a year ago. Maruti Suzuki India Chairman RC Bhargava said: “It has been in many ways the best quarter we have ever had.”
As per the second quarter performance in the ongoing fis- cal, on annualised basis, the production would have crossed 1.7 million cars, which is “way beyond 100% capacity utilisation”, he added.
The company aims to sell two million cars every year by 2020.
Bhargava said the company’s profitability was driven by high capacity utilisation due to robust sales. “When you have capacity utilisation like we have now, every extra car we make adds to profit because of reduced overheads, including depreciation.”
The company’s sales in the period under review were at best in a quarter beating the previous record of 3,60,402 units in the fourth quarter of 2015-16.
In terms of profit as well, this is its highest in a quarter breaking the record of ₹1,486 crore posted in the first quarter (April-june) of 2016-17. During the quarter, the company’s average discounts were less at ₹16,100 as compared to ₹19,500 in the same period last year.
MSI said lower expenses on sales promotion and marketing and higher non-operating income also contributed to increase in profit.