India’s largest carmaker Maruti Suzuki reported a 14% increase in net sales for the third quarter, but net profit increased by only 3% due to a rise in tax expenses and investment losses.
Operating profit rose 22% on year.
Higher “tax rates and lower non-operating income due to mark-to-market impact on the invested surplus” were highlighted as reasons for the poor bottom line performance.
Under India’s new accounting rules, any change in the value of any investment must be made good via provisions on the profit and loss account.
Net sales for the December quarter came in at Rs 18,940 cr, while net profit was Rs 1,799 cr.
Operating profit for the quarter rose to Rs 3,038 cr.
Profitability was helped by higher sales volume, cost reduction efforts, lower sales promotion expenses and forex benefit, the company said. On the negative side, higher commodity prices hurt margins.
ROYALTY AGREEMENT
The company also said it has approved a new method of calculating royalty payable to its Japanese parent and sent it for approval to its parent, Suzuki.
The new method would result in lower royalty payments for new model agreements starting the Ignis, it said.
The Company sold a total of 431,112 vehicles during the Quarter, a growth of 11.3 per cent over the same period of the previous year.
Sales in the domestic market stood at 400,586 units, a growth of 12.4 per cent. Exports were at 30,526 units.