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Informist, Friday, Jul. 31, 2026

 

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--Maruti Suzuki: Revived settlement cycle for select commodities for suppliers
--CONTEXT: Maruti Suzuki mgmt's comments in post-earnings analyst call
--Maruti Suzuki: Faced logistics-related challenges due to W Asia war in Q1
--Maruti Suzuki: Depreciation costs increased Q1 due to new Haryana facility
--Maruti Suzuki:Plan to revert to older commodity settlement cycle gradually
--Maruti Suzuki: Healthy sales growth still constrained by supply
--Maruti Suzuki: See prices of aluminium easing from peak

 

By Anand JC and Gunjan Rajput

 

MUMBAI/NEW DELHI – Maruti Suzuki India Ltd. Friday said its profitability in the June quarter was impeded by the sharp rise in prices of commodities and a temporary change in the settlement cycle in payment to suppliers for select commodities such as rubber, plastics, and aluminium. "The company faced a double impact, one from higher commodity prices and two from an accelerated pass-through of these higher costs to our quarterly results," Rahul Bharti, the senior executive officer of corporate affairs at Maruti Suzuki, told investors in a post-earnings conference call.

 

Prices of a wide range of commodities have gone up significantly ever since the war in West Asia broke out, prompting automobile companies to hike prices of their vehicles aggressively. While most automobile companies began hiking prices from January onwards, Maruti Suzuki took its first price hike from June onwards, and the second price increase comes into effect from August. 

 

"The sudden and steep increase in commodity and energy prices did create some working capital pressure for several suppliers," Bharti said. "To support suppliers and ensure uninterrupted production, the company temporarily revised the settlement cycle for certain commodities such as aluminium, plastics, and rubber from a quarterly lag to a monthly lag basis," he said, adding that this is an extraordinary measure which will wind down gradually as volatility in prices of commodity ease.

 

The war between the US and Iran also caused disruption in production plans of many automakers. However, Bharti said Maruti Suzuki did not face them. "There was no disruption. We did hear of disruption in the industry, going to gas or energy or commodities," Bharti said. "But with such a large, spread-out value chain, we did not have any disruption," he added. However, the company faced some logistics-related disruption and volatility in shipping schedules as a result of the war. 

 

Hours after the market closed, Maruti Suzuki reported a net profit of INR 33.52 billion on revenues of INR 524.56 billion. Its net profit fell year-on-year for the second consecutive quarter, despite revenue growing at its fastest pace in 15 quarters, as expenses rose at their sharpest rate in 16 quarters during the June quarter.

 

"Commodity costs had an adverse impact of approximately 300 bps. Importantly, nearly 110 bps of this impact were attributable to the temporary change in the commodity settlement cycle from a quarterly lag to a monthly lag basis," Bharti said. 

 

The company reported an operating earnings before interest, tax, depreciation, and amortisation margin of 8.6% for the June quarter, down from 12.6% a year ago. Higher gas costs impacted Maruti Suzuki's margins by around 20 bps; unfavourable fixed cost absorption due to inventory depletion impacted margins by 30 bps; and adverse foreign exchange impacted margins by 30 bps.

 

Its depreciation costs increased by 20 bps due to a new facility in Haryana's Kharkhoda. In May, the company commenced production at the second plant of its Kharkhoda facility in May, adding an annual production of 250,000 units. Thursday, the company said it commenced commercial production at the fourth manufacturing line at Gujarat's Hansalpur, adding another 250,000 units of annual production capacity.

 

With this, the company's annual output capacity has increased to 2.9 million units. The company expects both facilities to ramp-up progressively in due course, Bharti said. 

 

Its domestic wholesale sales grew 33% on year to 534,000 units in the June quarter. On its price hikes, the company said it took a calibrated two-step price hike to preserve demand momentum. "Most of the benefit of these price increases would flow to us in the second quarter," Bharti said.

 

Maruti Suzuki said its dealer inventory closed at nearly 13 days as of Jun. 30, which is "much" below its optimum level of one-month inventory. "The pending customer order book remained healthy at about 130,000 units at the end of the quarter. Demand continued to remain strong across both urban and upcountry markets," Bharti said.

 

Its exports improved 28% in the reporting quarter. The company is exporting more cars than the other 16 car manufacturers in India put together, Bharti said. South Africa, Japan, and Europe remained key export destinations in the June quarter even as exports to some markets in West Asia were affected because of the war. West Asia accounted for around 12% of the company's car exports before the war broke. 

 

Highlighting its plans for the future, Bharti said Maruti Suzuki will launch multiple SUVs in the coming years. "Within the SUV and the premium segments, we will have launches," he said. Additionally, the company is working on hybrid technologies and is running research projects on hydrogen, highlighting the carmaker's ongoing work on multiple powertrains. 

 

The company disclosed its earnings for the June quarter after market hours. Its shares closed 0.3% higher at INR 14,234 on the National Stock Exchange. End

 

Edited by Deepshikha Bhardwaj

 

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