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Jul 30, 2012, 08.19 AM IST
Maruti Suzuki India's first quarter net profit slipped 23% year-on-year to Rs 424 crore as a sharp depreciation in rupee against the US dollar and yen led to higher import costs for India's largest passenger car maker.
Maruti Suzuki India 's first quarter net profit slipped 23% year-on-year to Rs 424 crore as a sharp depreciation in rupee against the US dollar and yen led to higher import costs for India's largest passenger car maker.
The company's net sales in April-June were up 28% to Rs 10,529 crore.
"Adverse currency movements, notably the yen-rupee exchange rate, impacted profits negatively," Maruti said on Saturday.
Apart from the rupee fall, India's passenger car makers have also been hit by sluggish sales over the last one year, due to expensive loans and high petrol prices.
Maruti Suzuki's quarterly sales volumes were up just 5.1% to 2,95,896 units. While domestic sales rose 5% to 2,63,264 units, exports were up near 6% to 32,632 units last quarter.
"Market demand continued to skewed in favour of diesel cars, while petrol cars suffered a sharp de-growth during the quarter," it said.
Maruti Suzuki's diesel versions of Swift hatchback and DZire compact sedan are among the most selling cars in the industry presently. But the company is facing a up hill task of retaining its market share after a violent labour unrest led to shutdown of its Manesar plant, which accounts for 35% of the company's production and where the two cars are made.
Last year too the company was hit by labour unrest at the Manesar, which was resolved after a tri-partiate aggrement. This time around the plant is totally shut and with several senior executives injured and the death of a general manager, it is unlikely the issue will be resolved soon.
Swift and DZire already have a waiting period for as much as six months, which will only get worse if the strike lingers on and some people are likely to look at buying other models from rival car makers, analysts warn.
"Swift and DZire are high margin products and would have impact of around Rs 110-115 crore per month on net profit of the company," if the strike goes on for over two months, said R Murali Krishnan and Mitul Shah of Karvy Stock Broking in a recent note.
Maruti Suzuki shares closed up 0.4% at Rs 1,112.95 on NSE on Friday. The stock is down 7.5% in the last two weeks.
Ashish Nigam and Kunal Jhaveri of Antique Stock Broking said in a report dated July 23 that while the recent stock correction would have captured most of the financial impact arising from the lock-out, they expect the stock to languish till the issue is completely resolved, more so since Manesar is key to their operations for the next three years.
The Antique analysts have put the stock rating under review, following the labour unrest and Karvy Stock Broking has put a "underperform" rating on Maruti Suzuki.
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