Other income lifts Maruti net

New Delhi, July 26: Maruti Suzuki today reported an 18 per cent rise in net profit for the quarter ended June as higher other income offsets pressures from sluggish sales and higher input costs.

The company posted a net profit of Rs 549 crore against Rs 465 crore in the year-ago period. Sales rose 3.3 per cent to Rs 8,320 crore.

Total income from operations grew 2.65 per cent to Rs 8,529.30 crore from Rs 8,309.18 crore a year earlier. The better-than-expected result was partly on account of about an 80 per cent rise in other income at Rs 180 crore compared with Rs 100.44 crore in the year- ago quarter.

“External environment was challenging from both volume and margin perspective. Petrol prices were unprecedented and interest rate hikes hurt customer confidence (during the quarter),” Ajay Seth, chief financial officer at Maruti Suzuki India said.

Higher commodity prices and foreign exchange volatility put pressure on margins, he said, adding that the market was sluggish because of a sharp rise in fuel prices and higher interest rates.

Seth said “some capital gains due to some long-term investments and higher yields” helped in higher other income.

The Reserve Bank of India has also raised interest rates 11 times in the past 15 months, a move that will further hurt demand for cars, a significant number of which are financed through loans.

“A hike of 50 basis points in the interest rates by the RBI could hit passenger vehicle sales very hard,” said Pawan Goenka, president of the Society of Indian Automobile Manufacturers .

Maruti’s total sales were marginally down at 2,81,526 units against 2,83,324 units in the same period in 2009-10.

Bhel performance

Power equipment major Bhel has posted a 22 per cent rise in net profit in the first quarter ended June at Rs 816 crore against Rs 668 crore a year ago, helped by a faster execution of projects and higher non-operating income.