NEW DELHI Maruti Suzuki drew a line under a fiscal year to forget on Saturday after posting better-than-expected quarterly profit, as the country's biggest carmaker forecasted a return to double-digit sales growth.
Maruti will increase local sourcing and ramp up diesel production as it looks to bounce back from a year marked by labour strikes that cost over $500 million in lost production and an industry-wide sales slowdown on high interest rates.
"We are working very aggressively on cost reduction on the supply side as well as the localization side," chief financial officer Ajay Seth told reporters.
The car maker, which sold 11 percent less cars in the previous fiscal year, expects sales growth of 10 to 12 percent in the year to March 2013, managing executive officer Mayank Pareek said.
Capital expenditure during the year will be around 30 billion rupees, Seth added, including an increase in diesel car capacity to 400,000 vehicles.
"Net profit came in higher than anticipated," said Dipen Shah, head of fundamental research at Kotak Securities. "After going through a difficult patch in fiscal year 2012, we expect the company's performance to improve in fiscal year 2013."
Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp (7269.T), said profit in the quarter to March fell an annual 3 percent to 6.40 billion rupees, its third consecutive fall in quarterly profit, but better than estimates.
Analysts expected net profit of 5.65 billion rupees, according to Thomson Reuters I/B/E/S. Maruti posted a more than 50 percent fall in profit in the previous two quarters.
Maruti, which 18 months ago sold every other new car in India but is under pressure from local rivals and global players such as Ford Motor Co (F.N) and Nissan Motor Co (7201.T), blamed rising costs on high commodity prices and a weak rupee.
The car maker imports a large amount of its vehicle parts from Japan. The rupee fell around 13.5 percent against the Japanese yen during the year to March 31.
Maruti said in a statement it would issue a dividend of 7.50 rupees per share.
Overall car sales in India grew an annual 13.4 percent in the January-March quarter, in a welcome fillip for automakers that saw a meagre 2.2 percent rise in sales over the fiscal year to end-March mainly due to high interest rates.
Maruti, which in January posted its first monthly sales increase since May 2011, said vehicle sales rose 5 percent in the quarter. Revenue during the March quarter rose 17.2 percent from a year previous to 114.86 billion rupees.
(Reporting by Arup Roychoudhury; writing and additional reporting by Henry Foy in MUMBAI; Editing by Ed Lane)