Maruti Suzuki witnesses a decline of 35% in overall profit

Maruti Suzuki India witnessed a decline of 35% in profit as the company posted March quarter profit of Rs 800 crore, which is way lower than the last year's profit of Rs 1,240 crore. The manufacturer was not able to achieve the desired profit of Rs 910-950 crore.

According to RC Bhargava, Chairman, Maruti Suzuki, the main reason behind the profit declination is because the company paid Rs 143 crore on the account of stock compensation to dealers, as the government has reduced the excise duty on automobiles to lure more buyers and increase sales. Before the stated excise duty cut, dealers had already acquired the cars from factories, which resulted in reimbursement to the dealers by the manufacturers so that the reduction in excise duty can benefit the customers. Moreover, the sluggish economy and deprecating value of Indian currency in international forex market is also to be blamed for this profit margin decline.

Recently, the automaker had recalled 1.5 lakh Dzire's in the month of April 2014, which also made a dent in the quarterly books. Apart from that, the company sold 2,98,596 units of cars as compared to 3,08,871 units during the same period in 2013. The exports have also dropped to 26,274 units, which is a fall of 24.6%.