Amidst the slowing down demand and shrinking margins due to weakening rupee, the Indian auto giant Maruti Suzuki India Limited, has registered a massive slump of 64 percent in its profits, in the Q3 of financial year 2011-12. The total profits of the company stood at Rs 206 crore in the quarter ended on December 31st 2011, as compared to the net profit of Rs 565 crore in the same quarter preceding financial year.
The company saw a slump of 28% in its quarterly sales during this quarter (Oct to Dec 2011), which was a mixed effect of strikes at Maruti’s Manesar Plant and slowing demand in the domestic market.
In a recent statement, the company said, "Unit sales in the quarter were impacted by sluggish market conditions caused by higher fuel prices and interest rates. Additionally, the company lost around 40,000 units in production due to the industrial relations problem at Manesar."
The continuously depreciating rupee has not only made the company’s imports of components costlier directly and indirectly, but impacted the royalty share of Suzuki Motor Corp in the profits.
While further elaborating the impact, Mr. Ajay Seth, CFO at Maruti Suzuki, said, "The year on-year forex impact in the quarter was to the tune of Rs 200 crore. This was on account of direct and indirect imports, royalty outgo and reinstatement of liabilities partially offset by export gains."
