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NEW DELHI, May 21 (Reuters) - India's largest carmaker, Maruti Udyog Ltd, a unit of Japan's Suzuki Motor Corp , reported on Wednesday 2002/03 net profit soared 40.1 percent from a year ago, helped by productivity gains and cost cutting.
The automaker, held 54.2 percent by its Japanese parent and poised for a public issue likely next month, said in a statement it posted a net profit of 1.464 billion rupees ($31.3 million) in the past year to March compared to 1.045 billion in 2001/02.
Total revenues of the company, in which the government holds a 45.54 stake, rose 0.3 percent to 94.26 billion rupees. Profit before tax jumped 138.4 percent to 2.821 billion rupees.
It said net profit growth was driven by productivity-boosting measures and company-wide cost-cuts.
"Maruti engineers worked with component suppliers, leading to a reduction in the cost of components and further improvements in quality," it said. "The localisation levels for components also went up and helped in reducing costs."
Maruti, which has a dominating 50.8 percent share of the domestic car market with its small, low-priced cars, said it sold 362,426 vehicles in the past year to March, up 2.9 percent from the 352,197 units it sold in the previous year.
But the carmaker has faced increasing competition in the past four years from the Indian units of Hyundai, Fiat, Ford and local firm, Tata Engineering and had to cut the price of its largest selling model last year to win back market share.
The government plans to offload 25 percent of the carmaker's stake to institutional investors and the domestic public, probably in June, as a part of its disinvestment drive. Suzuki has underwritten the public issue at 115 rupees a share.
In a draft public issue prospectus filed earlier this month, Maruti said its parent had agreed to sell knocked-down components to it at a 10 percent discount for the next two years and would not charge royalty on four of its oldest models.
The firm makes 10 models in India and imports one that is fully built. The discount and royalty waiver could potentially save the carmaker 1.56 billion rupees a year.
In April, Maruti said it expected a 10 percent rise in unit sales in the year to March 2004. It has said it aims to cut in half manufacturing costs per vehicle over the next three years to March 2005.
Maruti is one of 11 carmakers jockeying for a share of India's 560,000-units-a-year new car market but its volumes are more than twice those of its nearest competitor, the local unit of South Korea's Hyundai Motor Co .
Analysts expect India's new car market to grow by nearly 10 percent this year on the back of a 6.4 percent rise in 2002/03. ($1 = 46.835 rupees)