NEW DELHI, July 24, 2010 (AFP) – India’s biggest carmaker Maruti Suzuki reported Saturday quarterly net profit fell by a surprise 20 percent as the company was pummelled by a surge in raw material costs. Maruti, majority-owned by Japan’s Suzuki Motor Corp, said net profit during the fiscal first quarter slid to 4.65 billion rupees (99 million dollars) from 5.84 billion rupees a year earlier, despite a 27 percent leap in sales.
The fall was a shock for financial analysts who had forecast Maruti would report a profit of around 6.6 billion to seven billion rupees for the three months to June 30.
“The drop in net profit is due to higher commodity prices” along with other factors such as a fall in earnings from European exports due to a weaker euro, the company said in a statement.
While car sales have soared, the sector has been under pressure from rising prices of raw materials, such as steel, aluminium and rubber, that have been driven by growing demand in emerging market giants such as China and India.
Maruti, which has been producing to maximum capacity and sells nearly every second car in India, reported it had paid 60.80 billion rupees for raw materials — a 26 percent rise from same