[NEW DELHI] India's biggest automaker, Maruti Suzuki India Ltd, posted its first fall in quarterly net profit in two years, hit by higher expenses and production loss due to civil unrest near one of its factories.
Profit for the three months through March dropped 11.7 per cent from the same period a year prior to 11.34 billion rupees (S$230.52 million), the automaker, majority-owned by Japan's Suzuki Motor Corp, said on Tuesday.
Analysts, on average, had expected profit of 11.3 billion rupees, Thomson Reuters data showed.
The automaker, which sells about one in every two cars in India, said net sales rose 12.5 per cent to 149.3 billion rupees. By vehicle numbers, sales rose 3.9 per cent to 360,402.
Maruti also said it suffered a production loss of over 10,000 vehicles due to unrest in February near a factory in northern India.
Analysts said the earnings were strong considering the company offset the impact of a weaker rupee versus the yen with a better product mix and reduced parts imports.
"The company has been impacted by an appreciating yen but only to the extent of royalty payment" to its parent, said Jigar Shah, head of research at Kimeng Securities India.
"In terms of material cost, the company managed some amount of import substitution and we believe they will continue to do that." The rupee fell 6.5 per cent against the yen during the period, its steepest in 15 quarters, raising the cost of parts from Japan.
Maruti targets double-digit growth this fiscal year, and Chairman R C Bhargava also said it has earmarked 44 billion rupees for capital expenditure versus 25 billion rupees spent a year earlier.
However, Mr Bhargava said the year will nevertheless be tough on many counts, with foreign exchange looking even less favourable and commodity prices rising.
Automakers in India are also grappling with policy changes such as higher car taxes, announced in February, and a ban on sales of large diesel vehicles in New Delhi to curb pollution. That has lowered sales expectations for the current fiscal.
The silver lining is predictions for a better-than-average monsoon this year after two years of drought, which would push up farm incomes and boost rural car sales.
While quarterly profit fell, Maruti reported its highest-ever annual profit of 45.71 billion rupees for the year ended March 31, up almost 25 per cent.