Mumbai: India's biggest car maker, Maruti Suzuki India Ltd, on Thursday reported a surprising 34 percent fall in quarterly net profit, as a large depreciation charge weighed on higher sales.
Maruti, 54.2 per cent owned by Japan's Suzuki Motor Corp, said net profit fell to 2.98 billion rupees ($75 million) in the fiscal fourth quarter to end-March, from 4.49 billion rupees in the same period a year earlier. That lagged a forecast of 4.61 billion rupees in a Reuters poll of 11 analysts.
Maruti said it had adopted shorter depreciation cycles for its equipment and tooling assets, and made an additional provision of 2.1 billion rupees for 2007/08, which impacted its quarterly profit.
Maruti has nearly half the Indian car market, with models such as the best-selling Alto and Swift hatchbacks, but is facing rising competition from rivals, such as Hyundai Motor, Honda Motor, General Motors and Ford Motor.
Local rival Tata Motors plans to launch the Nano, a car priced at just above $2,500, later this year, which is expected to take a share of the small car market.
Maruti's sales edged up 1 percent to 202,225 units in the Jan-March quarter, but the company has warned that the high cost of raw materials, and capital spending would erode margins.
Shares in Maruti, which has a market value of $5.5 billion, fell 16 percent in the quarter, compared to a 20 percent fall in the auto index and a 23 percent decline of the key index.
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