Indian vehicle manufacturers have posted outstanding results for the second quarter though concerns about tising cost raw materials costs, especially steel, remain.
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Passenger car market leader Maruti Udyog, which builds Suzuki-designed models, posted a healthy 48% rise in net profit for the second fiscal quarter of this fiscalto INR1.83 billion, up from INR1.23 billion for the same period last year. Net sales rose 25% to INR26.98 billion (253,472 units) ahead of Q2 ‘03’s INR21.57 billion (212,468 units).
The healthy rise in profits came despite adverse effects of raw material cost rises and the reduction of Esteem [this Indian model is an updated version of the 1980s Swift sedan; not the later US market model known elsewhere as the Baleno], Wagon R and Zen prices.
The company increased its share of the passenger car market from 54 to 55% in the second quarter.
Indica, CityRover and truck maker Tata Motors reported a 49.6 % rise in Q2 after tax profit to INR3.09 billion from INR2.06 billion last year. Net operating revenue was up 30.5 % to INR41.47 billion (95,576 units) from INR31.77 billion (78,125 units) a year ago. The company admitted its operating margin was under pressure and has declined from 13.8 % to 12.5%. Tata estimated that 60% of its revenues came from the truck business.
Mahindra & Mahindra, which makes own-brand SUVs and light trucks, as well as assembling and distributing several Mitsubishi models, reported a higher net profit of INR1.22 billion compared with INR 729 the previous year on net operating revenue of INR15.54 billion (up from INR 11.39 billion).
Mahindra also warned rising material costs would affecting its balance sheet adversely in future.
The only disturbing note seems to have come from truck manufacturer Ashok Leyland which reported a net profit fall of 20% to INR 430.6 million this year from INR 534.6 million in 2003.
The company is just recovering from a workers’ strike at its engine plant in Hosur. However, the company’s bottom line was hit harder by a rise in raw material costs, especially steel. Raw material costs increased to 64.6% of sales compared with 62% last year.
Deepesh Rathore / Tilak Swarup
