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India's Maruti net profit surges 49 percent on weak yen

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(Globalpost/GlobalPost)

Maruti Suzuki, India's biggest carmaker by sales, Thursday reported a 49 percent jump in first-quarter net profit as cheaper imports of parts offset a drop in sales.

Maruti said quarterly profit surged to 6.32 billion rupees ($107 million) in the three months to June from 4.24 billion rupees a year earlier.

Maruti, 56.2 percent owned by Japanese automaker Suzuki Motor, has seen its costs drop due to a weakening of the yen against the rupee, which makes car parts imported from Japan cheaper.

The yen fell five percent against the rupee in the April-June quarter compared to the previous quarter ended in March, analysts said.

Year-on-year, the yen fell around 11 percent against the rupee.

"The rise in profit was due to cost reductions and favourable foreign exchange rates," the New Delhi-based company said in a statement.

In the April-June quarter, the firming of the dollar to the rupee also aided Maruti's exports to Africa, Europe and a number of countries in South Asia.

Maruti's earnings come at a time when demand for new cars in India is sluggish, due to high inflation, costly car loans and slackening economic growth.

India's car sales slid nine percent in June year-on-year, marking a record eighth straight month of decline.

Maruti's sales fell 5.1 percent to 99.95 billion rupees, on a 10 percent drop in volumes to 266,434 units in the quarter.

Maruti, founded in 1983, holds 39 percent of the Indian passenger car market, with its widespread service market helping it fend off rivals.

Ertiga minivans and Dzire sedans have been its better selling models as increasingly affluent drivers shift from the company's trademark small, inexpensive cars to bigger, costlier vehicles to navigate India's chaotic, potholed roads.

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http://www.globalpost.com/dispatch/news/afp/130725/indias-maruti-net-profit-surges-49-percent-weak-yen