New Delhi: In a tough market, the country's largest car-maker Maruti Suzuki India on Friday posted a 35.46 percent decline in net profit to Rs 800.05 crore in the fourth quarter ended December 31.
For the full financial year 2013-14, it registered its highest annual net profit.
The company had reported a profit of Rs 1,239.62 crore in the fourth quarter of the previous financial year.
Net sales in the quarter declined 9.48 percent to Rs 11,818.13 crore from Rs 13,056.26 crore a year earlier, Maruti Suzuki India said in a statement.
Lower volumes, higher sales promotion expenses and payment of compensation to dealers due to a reduction in excise duty affected the bottom line during the quarter, the company said.
"The lowering of profit in the fourth quarter was partly due to dealer compensation due to excise duty cut," Maruti Suzuki India Chairman RC Bhargava told reporters here. The compensation to dealers worked out to Rs 143 crore.
Sales volumes dropped 5.48 percent to 3,24,870 vehicles during the quarter.
However, the company's consolidated net profit for the financial year ended March 31 rose 15.53 percent to Rs 2,852.92 crore, its highest ever, compared with Rs 2,469.28 crore in 2012-13.
The previous highest annual profit was in 2009-10, when the company posted earnings of Rs 2,497.6 crore.
Net sales for 2013-14 stood at Rs 43,271.78 crore as against Rs 43,215.83 crore in the earlier fiscal.
"Overall, despite a declining market, we could increase our annual profit on the back of our cost reduction and localisation initiatives, together with favourable foreign exchange," Bhargava said.
Maruti Suzuki India was able to cut raw material costs by about 3 percentage points to 73.4 percent in FY14.
Annual sales stood at 11,55,041 units, a drop of 1.4 percent from 11,71,434 units in 2012-13.
The company's board recommended a dividend of Rs 12, or 240 percent, per share of face value Rs 5 each for 2013-14.
The company is looking to "at least" maintain the level of sales in the current financial year, Chief Operating Officer (Marketing and Sales) Mayank Pareek said.
With exports declining, Pareek said the company is exploring how to develop markets in Africa and the Middle East to expand overseas sales.
Maruti Suzuki's exports in FY14 were down at 101,352 units from 120,388 units previously.
The company is expected to launch three cars this financial year, including the premium sedan Ciaz, which was showcased at the Auto Expo this year.
Maruti Suzuki shares fell 1.35 percent to Rs 1,956.05 at the close on the BSE today.
The company said last month it would seek the approval of minority shareholders for its proposed plant in Gujarat, which was taken over by parent Suzuki Motor Corp.
The entire investment in the facility would be funded by depreciation and equity brought in by Suzuki Motor via a wholly owned subsidiary, the company said on March 15.
Maruti Suzuki came under pressure from institutional investors after saying in January it had accepted Suzuki's proposal to implement the Gujarat project.
Bhargava said the process of finalising all contractual agreements for the Gujarat plant and getting shareholder approval may take place after August-September.
With the change in the conditions for investment at the plant, as no mark-up on vehicles will be charged by Suzuki Motor to Maruti, the Japanese parent will double its equity infusion, which will be about Rs 3,000 crore, he added.
This will be over and above the initially planned investment of Rs 3,000 crore at the plant to have its total annual full capacity of 1.5 million.
"We need to check the position on tax liability or even litigation and once we finalise the contract manufacturing agreements, we will hold a roadshow and meet up with shareholders," Bhargava said.