NEW DELHI: Declaring a 70 per cent dividend and registering 39.1 per cent jump in net profit in the last quarter of 2005-06, Maruti Udyog Ltd (MUL) on Wednesday indicated that it will be targeting a double digit growth in sales this fiscal as it proposes to pump in Rs. 1,400 crore to fund its capital expenditure plan which envisages, among other things, establishment of a new car plant.

"We are aiming at a double digit growth in sales for 2006-07," MUL Managing Director, Jagdish Khattar, told media persons after the company's board meeting where financial results were taken up.

MUL has reported a 39.1 per cent jump in net profit for the quarter ended March 31, 2006, at Rs. 360.90 crore and announced a 70 per cent dividend for 2005-06, despite sales growing by single-digit, higher raw material costs and a 29 per cent drop in exports. Total income (net of excise) moved up by eight per cent to Rs. 3,392.20 crore during the quarter under review from Rs. 3,139.70 crore in the same period in the previous year. The net profit for the year ended March 31, 2006, rose by a healthy 39.2 per cent to Rs. 1,189 core from Rs. 853.60 crore a year ago. Total income (net of excise) was up 10 per cent at Rs. 12,481.40 crore against Rs. 11,346.50 crore. With the board recommending a 70 per cent dividend for 2005-06 against 40 per cent in the previous year, the aggregate dividend payment will be Rs. 3.50 per share, which has a nominal face value of Rs. 5.

Sharing details about the planned capital expenditure, he said, Rs. 325 crore would be for MUL. The new car plant would need an investment of Rs. 1,524 crore and only 70 per cent of this was likely to be invested during the current fiscal. As such, the company would be making an overall investment in 2006-07 of Rs. 1,391 crore.

The new car plant at Manesar is expected to start production by this year-end and will start with an initial capacity of one lakh units which will be scaled up to 2.50 lakh units.

In keeping with the company's philosophy of adding new offerings, Mr. Khattar said it would introduce a new compact car for export markets by 2008-09, which was expected to sell around one lakh units annually. "This model, while serving the Indian market, will be for export, mainly to Europe," he said.

In order to reverse or arrest the trend of declining export numbers, which fell 29 per cent in 2005-06, the company is taking a look at new markets like Africa, Middle East and South America. He indicated that with the growth in sales, the company would also look at rationalising product platforms from the current 7-8 to 4-5. "All pre-Alto and Wagon-R model platforms will not be used again. The models which follow will fall under 4-5 platforms," he said, though ruling out discontinuing the M800 model.

So far as the diesel engine joint venture plant, where Maruti held 49 per cent stake and Suzuki 51 per cent, was concerned, Mr. Khattar said it would become operational by this year-end and the first engine would be for a compact car.

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