Uncertain sales may hit Maruti
April 25: Maruti Suzuki India (MSI) on Monday reported its fourth-quarter earnings that beat estimates, as strong demand helped offset the impact of rising input costs. But the company warned that the short-term outlook was uncertain due to the rising interest rates that could dampen consumer demand, and hike commodity prices. Sales growth in India is expected to fall by more than half this fiscal year to 12-15 per cent from the peaks a year earlier, according to the Society of Indian Automobile Manufacturers. “In the short term, there is uncertainty on factors like rising fuel prices, interest rates and commodity prices,” the Maruti Suzuki chief executive, Mr Shinzo Nakanishi, said.
Maruti, 54.2 per cent owned by Japan’s Suzuki Motor Corporation, spent Rs 27,980 crore in fiscal 2011 for consumption of raw materials and components. Indian auto makers are expected to see pressure on operating margins as commodity prices rise further. The rising costs of steel, rubber and other inputs have forced some Indian car makers, including Maruti to raise prices in recent months. Capital expenditure for the year that started in April is seen at Rs 4,000 crore, chief financial officer, Mr Ajay Seth, added.
Earlier this month, Maruti Suzuki said it had raised prices by up to 2.4 per cent across all models, its second price increase in three months. EBITDA (earnings before interest, tax, depreciation and amortisation) margins fell to 10.1 per cent in the fourth quarter from 13.5 percent in the year-ago period. “Our effort will be to protect and increase margins as we go forward,” Mr Nakanishi said.
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