Maruti posts record profit for FY17; Q4 net up 16%
Driven by premium models, Maruti Suzuki India (MSI) on Thursday reported 36.6 per cent jump in its annual profit to a record Rs 7,511 crore for the last fiscal, while fourth-quarter net rose by 15.8 per cent.
The company's net profit in 2015-16 was Rs 5,497.2 crore. Its net sales for 2016-17 were at Rs 66,909.4 crore, up 18.5 per cent from the previous fiscal.
Volumes for the financial year ended March 31, 2017 were up 9.8 per cent to 15,68,603 units. Of this, exports were at 124,062 units, MSI said. The company had posted record annual profit and sales in 2015-16 as well.
The MSI board has recommended a dividend of Rs 75 per share of face value of Rs 5 for 2016-17 entailing a total outgo of Rs 2,726 crore inclusive of taxes. MSI had paid a dividend of Rs 35 per share in 2015-16.
For the fourth quarter, MSI reported a net profit to Rs 1,709 crore against Rs 1,476.2 crore in the January-March period of previous fiscal. Net sales during the fourth quarter rose to Rs 18,005.2 crore, up 20.3 per cent. Car sales were up 15 per cent to 4,14,439 units during the quarter, the company said, adding that the exports were at 31,771 units.
It has earmarked Rs 4,500 crore capex for the current financial year.
"Capex for this year (2017-18) is Rs 4,500 crore," MSI chairman RC Bhargava said.
The amount would be spent on various activities including replacement of machinery, R&D and marketing initiatives, he added.
On R&D alone, the company plans to invest in the range of Rs 700-1,000 crore, Bhargava said.
MSI is likely to pay royalty to its Japanese parent Suzuki Motor Corp (SMC) for all its models in rupee terms by 2025, which could lower the annual outgo for the company.
MSI, which sells 15 models, currently pays royalty to SMC in yen except for compact SUV Vitara Brezza. "If you take a period of say next seven to eight years, most of our models would have changed... Let us say, by 2025, I would imagine that the royalty of all the models of Maruti would be in rupee terms," Bhargava said.
In 2015, MSI had announced that it would start paying royalty to its parent Suzuki in rupee instead of yen for all new models starting with the Vitara Brezza. The move was aimed at insulating the company from foreign exchange fluctuations, and thereby reducing average royalty rate to 5 per cent of net sales as compared to 5.6 to 6 per cent for the existing models, which were paid in yen.
MSI chief financial officer Ajay Seth said the company had a total adverse foreign exchange impact of around Rs 700 crore during the fiscal.
On dividend payment, Bhargava said the company's board has approved modifying the payment policy from 18-30 per cent of profit to 18-40 per cent.
With total cash reserves of Rs 23,000 crore, he said, the company's payout for 2016-17 would be around 37 per cent of profit.
He said MSI will be using the cash reserve to enhance its sales and service network across the country, for which it has already started acquiring land.
"We have to increase our sales and service to almost two to three times the current size if the company has to double its sales to around three million which will take less than ten years," Bhargava said. Investment on sales and service network will be in "thousands of crore", he added without specifying details.
MSI has around 2,200 showrooms and 3,200 service outlets across India.
On supplies from Japanese parent Suzuki's Gujarat plant, Bhargava said MSI has received up to 10,000 units till March and for the ongoing fiscal a total of 1.5 lakh is expected.