Home / Business / Maruti Q4 dips 4.6%; to phase out diesel models from April next year

Maruti Q4 dips 4.6%; to phase out diesel models from April next year

New Delhi, Apr 25 () The country’s largest carmaker Maruti Suzuki India (MSI) Thursday reported a 4.6 per cent decline in net profit to Rs 1,795.6 crore for the last quarter of 2018-19, hit by adverse foreign exchange rates, high commodity prices and rise in sales promotion expenses.

The company had posted a net profit of Rs 1,882.1 crore in the January-March period of 2017-18.

Net sales during the fourth quarter rose to Rs 20,737.5 crore, up marginally over the year-ago period. Total car sales, however, declined marginally to 4,58,479 units during the quarter under review.

For the entire 2018-19 fiscal, MSI posted a net profit of Rs 7,500.6 crore, down 2.9 per cent from the previous fiscal. Net sales rose by 6.3 per cent to Rs 83,026.5 crore in 2018-19.

Total car sales during 2018-19 were up 4.7 per cent to 18,62,449 units.

The auto major, which has a market share of over 50 per cent in the domestic passenger vehicle segment, Thursday announced to phase out diesel cars from its portfolio from April next year. It also announced to discontinue diesel version of its light commercial vehicle Super Carry from the same period.

Besides, the cash rich company said it has earmarked a capex of Rs 4,500 crore this fiscal for new product development, R&D and land acquisition for sales network. In 2018-19 the company had announced a capex of Rs 4,000 crore.

Terming the last fiscal as “difficult year”, Bhargava said the company faced various challenges including increase in commodity prices and downturn in the market.

“Rupee has not been particularly a robust currency and dollar and the yen and the euro they all went up … along with that commodity prices went up. We also had some extra depreciation because second line in Suzuki plant was commissioned in January,” he noted.

With downturn in the market, every player was forced to offer discounts, impacting profitability, Bhargava said.

“So while the sales revenue did go up by 6 per cent, expenses went up more thus impacting the profit,” he added.

On the outlook for the current fiscal, he said the market would continue to be weak on account various factors including uncertainty over fuel prices and coming up of BS VI emission norms from next year.

Bhargava said the company expected rural markets to perform batter in terms of sales growth for the company as compared with the urban centres.

The auto major expected production and sales to grow between 4 to 8 per cent for the current fiscal, Bhargava said.

In 2018-19, the company had targeted a sales growth of 10 per cent but could manage only 6.1 per cent.

On the phase out of diesel cars, Bhargava said: “From April 1, 2020, we will not be selling diesel cars.”

He, however, added that if there is a demand for BS VI diesel cars the company might go ahead and develop a model to cater to that demand. The company, however, ruled out bringing in models with strong hybrid technology this year.

Currently, 23 per cent of the company’s total sales in the domestic market come form diesel models. In 2018-19, the company had sold 4.63 lakh diesel cars in the country.

Some of the company’s models like Vitara Brezza and S-Cross currently come with a diesel engine option only. Others like Swift, Baleno, Dzire, Ciaz and Ertiga have petrol versions in addition to the diesel trims.

MSI also decided to pull the plug on the diesel version of its light commercial vehicle Super Carry from next year. It would be only available in petrol/CNG version going ahead.

Bhargava said there is need to do a study whether electric cars or hydrogen powered cars were well suited for the country.

When asked about capex for the year, MSI CFO Ajay Seth said the company has earmarked Rs 4,500 crore for the current fiscal. The capital would go into various initiatives, including new product development, R&D and land acquisition for sales network, he said.

The company has over Rs 34,000 crore as cash on books.

The company’s board recommended a dividend of Rs 80 per share for 2018-19.

MSI shares ended 1.73 per cent lower at Rs 6,902.95 apiece on the BSE. MSS MR MR

News credit : Indiatimes