Maruti Suzuki not to raise vehicle prices soon

Maruti Suzuki registered a five percent increment in its quarterly net profit and met the expectations because of the powerful demand for its cars. This profit also helped the company in compensating with the increase in input costs. Also the September quarter observed a big sudden increase in car sales which was backed up by the strong economic growth. Now, it is also being expected that car sales will stay powerful in this quarter also because of the festival of Diwali. Maruti registered a net profit of Rs 598 crore for its fiscal second quarter that ended in September 30.

The company has shown a good growth in revenue by about 30% but the main reason behind a mere 5 percent growth include the royalty pay out. The royalty pay out of the company has been higher in this period's second quarter in comparison to the earlier year. This happened because of the change in the rates of royalty. This change occurred during the first quarter of the present year. The other reason behind the “only 5 percent” growth in revenue is the change exchange rate, especially on Euro side. Euro declined considerably in comparison to the earlier year. Last year, the company was moving a Euro Rupee rate of around sixty eight as against the average sixty two after hedging. This is where the difference can be seen relating to the reduced growth .

This time, the operating profit margins have come in at around 10.5% plus. Although the raw materials costs have declined but the increase on account of steel has been observed. This has occurred in the present quarter. As the company had some contemplating increase, there was an effect on the first quarter also. So upto that extent, the quarter displays some extra rise. But Maruti Suzuki also said that apart from this scenario, the company is otherwise moving forward. The company does not anticipate any more rise in the cost of steel but the cost of the rubber seems to become harder along with the prices of the metal. The company finds these two areas as the places where it can notice an increase in input cost. Apart from that there should not be too much of pressure on the commodity, says the company.

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