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Maruti turnover expected to dip 7 per cent

Despite major price cuts and sales promotion initiatives for the current fiscal, the Maruti Udyog Limited has projected to close the year with a seven per cent drop in turnover.

According to an internal assessment by the car major's finance department, its sales are likely to drop by over five per cent during the year, as against the 327,240 units in the domestic market in 1997-98, company sources revealed.

The turnover during 1997-98 amounted to Rs 81.33 billion as against Rs 76.62 billion the previous year. With the turnover now set to take a dip, it is most likely to rest at around Rs 76 billion at the end of the current fiscal, the sources added.

The net profit is likely to record a greater fall, which might result in a lower payout to both the equal partners - the government of India and the Suzuki Motor Corporation of Japan. The MUL board had announced a 30 per cent dividend last year, having earned Rs 9.77 billion as gross profit as against Rs 8.07 billion the previous year.

Maruti's contribution to the central exchequer had in 1997-98 increased to Rs 26.52 billion. The year before, it was Rs 25.40 billion.

Last year, Maruti had recorded a 27.6 per cent growth in net profit and 6.3 per cent increase in total income. However, its growth rate had declined by four per cent on a year-on-year-basis.

The company's bottomline would be squeezed this year because of the major price reductions, which it had effected on almost all its models in December as also the cost hikes the MUL had absorbed for the several value additions it had done on certain vehicles from time to time.

Maruti has absorbed close to Rs 1.2 for introducing upgraded versions of its existing models. Of this, the major absorption had been for the introduction of Zen VX. The company had to absorb around Rs 30,000 for the new look Zen, of which Rs 10,000 was by way of excise and the rest due to the new add-on features.

UNI

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