Rising input costs hit Maruti's Q1 net profit

The net profit of the country's largest carmaker, Maruti Suzuki fell down by Rising input costs hit Maruti's Q1 net profit   6.75 percent for the first quarter ended June 2008. This fall in the profit is due to rising cost of raw materials, a change in accounting norms and a loss from derivative instruments. Maruti reported a net loss of Rs13.90 crore from derivative instruments.

Q1 net profit was recorded Rs499.6 crors in the last financial year which is stood at Rs 465.8 crore. However, the revenue growth was recorded as per forecasts of 21 per cent. The domestic sales and export also affected the overall average. The operating profit margin stood at 16.67 per cent at Q1 which was 20.30 per cent in last year's first quarter.

Maruti had raised the prices of various models by 10,000 to Rs 15,000 to absorb rising raw material costs but the price rise did not work. The prices of steel and aluminum have further jumped to 10 to 15 per cent this quarter which is a sign of concern for auto giant. This rise in price of raw materials contributed 1 percent fall in the net profit.

The pressure margin of company is expected to go down in coming time due to low car sale and high rates of interest on auto loans. The company’s share price closed on the BSE at Rs 648.20 higher than the day’s opening price of Rs 625.