FY2011-12 Profits for Maruti India Fell By 28 Percent

Last fiscal year, Maruti Suzuki India suffered pangs of sluggish sales, labour issues and high commodity prices which ultimately resulted in the decline of net profits by 28.55% to Rs. 1,635.10 crore. The net profit recorded by the company in FY 2010-11 was Rs. 2,288 crore. This drop in the profits for the year ended in March 2012 is reportedly the steepest slump in three years for MSI. According to the Managing Director and CEO of Maruti Suzuki India, Mr. Shinzo Nakanishi, the entire auto industry was challenged by the adverse conditions of the 2011-12 which resulted because of the high interest rates, high petrol prices, and high inflation rates.

The segment facing the major impact was the cost sensitive small car segment, he added. Mr. Nakanishi also mentioned that another factor contributing to these dull figures is the inability of the company to supply more diesel cars which is the need of the hour as the car market has witnessed ebb in the demand of petrol cars which are ruled by the Maruti Suzuki.The previous significant drop in the profit of MSI happened in the year 2008-09 when the profits fell by 29.6% - the biggest figure ever. Mr. Nakanishi indicated that the unrest emerged among the labor force of Manesar plant also hampered the sales and the steep rise in the value of yen plus the descent in the value of rupee impacted the performance and cost aspects badly.

The total sales of MSI in 2010-11 declined by 10.8 percent and stood at 11,33,695 units against 12,71,000 units of previous year. In order to cope with the struggling demand of petrol cars the company offered an average discount of around Rs. 13,250 on each model. At the same time, the discount offered on the top-selling Maruti Alto stood between Rs. 22,000 and Rs. 25,000. For the fiscal year 2011-12 the members of the board of Maruti Suzuki India recommended a dividend of 150 percent i.e. Rs. 7.50 per chare of face value of Rs. 5 each. The recent launch of Maruti Ertiga MPV is expected to help the company recover from the adversities of last year.

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