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Maruti Hits Speed-Breaker

Although it logged a 17% rise in yearly sales, Maruti Suzuki posted an 18% fall in Q4 profit

The biggest car-maker in India, Maruti Suzuki India Ltd, evoked surprise from the investing community when it revealed, in its latest quarterly results figures, that there was a drop in net profit by as much as 19.9 per cent.

This came as a surprise because recent weeks’ figures had indicated that the company’s sales were back on track. In fact, the number of vehicles sold on YoY basis has actually increased by 17 per cent, both in terms of the number of vehicles meant for domestic use and exports.

However, the company recorded an impressive growth of 30 per cent in its income from its operations.

A big drag on the company’s financials was the huge surge in its expenditure—a rise of 35 per cent. Since the company's expenses were more than its income, it led to a fall in its net profit by more than 22 per cent—to Rs 24,313 lakh for the quarter ended on March 31, 2009 from the earlier Rs 29,768 lakh for the quarter ended on March 31, 2008.

The company has recommended a dividend of Rs 3.5 per share (i.e aggregating to Rs 10,112 lacs) on the nominal value of Rs 5.00 per share for the financial year 2008-09.

Japan's Suzuki Motor Corp holds a majority stake in the Indian car-maker to the tune of 54.2 per cent. Maruti controls almost 50% of the Indian car market.