Maruti Suzuki turnover decreases due to Rising Raw Material Costs

India’s biggest car-maker Maruti Suzuki India, Ltd, posted an 18 percent drop in third-quarter profit as a stronger yen, higher royalty payments and increased raw material prices damped gains from record sales.

Net income fell to 5.65 billion rupees ($123 million) in the three months ended Dec. 31 from 6.87 billion rupees a year ago, the company said today in a statement. Profit fell short of the 6 billion-rupee average of 34 analyst estimates compiled by Bloomberg. Sales gained 27 percent to 92.7 billion rupees.

“Maruti has been seeing pressure on its margins from increased commodity prices,” Jatin Chawla, who has a “reduce” rating on the stock at India Infoline Ltd. in Mumbai, said before the announcement. “The company was unable to raise prices due to the increased competition.”

Recently Maruti fell 3.2 percent to 1,229.35 rupees in Mumbai. The stock declined 14 percent this year, compared with a 10 percent drop in the Bombay Stock Exchange’s benchmark Sensitive Index.