Internal measures taken on cost, the weakening yen and commodity prices helped achieve good Q4 results, says, Ajay Seth, CFO, Maruti Suzuki. Maruti Suzuki’s Q4 net soared 80 percent year-on-year to Rs 1,148 crore. Talking to CNBC-TV18, Seth says the company has increased selling prices in January, which also helped achieve these numbers.
He added that as the yen has fair amount of bearing on the company’s margins, it has already hedged 30 percent of its hedge books of yen, and intends to increase this to about 50-60 percent in the coming months.
Here is the edited transcript of the interview on CNBC-TV18.
Q: Your numbers have been good at a time when the overall market is bad. Can you explain the reasons.
A: We had mentioned it earlier in the half-yearly conference that we are working towards our internal programmes on how to manage costs well. Localisation for us was a very key component. We have been saying that this will bring us significant results aided by the weakening yen and also commodity prices softening.
So, internal measures that we took on cost, the weakening yen and commodity prices helped us to achieve these results. We also had some minor correction on our selling price. We have increased selling prices in January. That has also helped us to achieve these numbers.
Q: These numbers are coming at a time when the overall market got totally hammered. Can you give us a sense of the kind of discounting that happened in FY13 compared to FY12?
A: Overall discounts this year were slightly high than last year. However, the discounts in the fourth quarter this year were lower than discounts in the fourth quarter of last year. So, we had this benefit of seeing a slightly declining discount trend in the fourth quarter. Hopefully, moving forward, we may see the trend of discounts getting corrected a bit.
Q: Also, in FY14, the diesel share of your overall production is going to go up to 40 percent. In terms of overall realisations, do you see healthier numbers and this stellar run that you have reported this time around to continue in FY14 as well?
A: There will be some increase in overall realisations as the percentage of growth compared to the volume growth but most of it has already been factored in this year because this year if you see, the realisations have been growing much faster than the volume growth. Next year also, you will see that trend but it will not be to the extent that you saw this year. Most of the base has already been corrected.
Q: The Bank of Japan announced its massive stimulus package, following which there was a significant depreciation in yen and of course you benefited tremendously. Going forward, could you give us a sense of your hedging strategy?
A: We have been continuously watching the yen. For us, this is the most important currency because it has fair amount of bearing on our margins. We have already hedged about 30 percent of our hedge books of yen. We intend to increase this hedge book to maybe about 50-60 percent in the coming months.