"Between August 1989 and July 1991, the price of the 800 increased 65%, from Rs. 1,00,680 to Rs. 1,66,629. Car prices had been revised upward seven times in that period for most models. (Please note seven times for the small period of 24 months).
Prices of raw materials and components also kept climbing , mainly because of increases in the administered prices of steel and aluminium and power, and strong inflationary trends.The cost of imports also increased , because of the devaluation of the rupee against the dollar by 18% in July 1991, the need to provide margin money by importers and a requirement to buy EXIM scrips for imports. High interest rate and tightening of money supply ( Same measures are taken by present Governor of RBI 2 days ago) pushed up the cost of the production and also affected the demand for car loans, the interest on which increased by about 10 % in 1991-92. Reduced depreciation benefits on cars affected car purchases by companies and independent professionals.
Cars sales declined by 7 percent. While sales of other cars fell by 28 %, Maruti clocked a 6 % increase in the sales of its cars and increased its market share to 66 %. Maruti sales may also have turned negative since the sales of the Omni and the 1000 cc car were declining. However, we cut prices to maintain sales growth. The prices of the Omni, which had been raised by 8 % in December 1991, were reduced by 4 % in January 1992. Similarly, the price of the 1000 cc car was slashed by 6% in January 1992. The company still managed to make profit of Rs. 6.61 crore in 1991-92, though it was lower than the previous year's profit of Rs. 8.82 crore"
* Text in the bracket is my comment.
FROM THE BOOK The Maruti Story By R C Bhargava with Seetha - COLLINS Business.
Prices of raw materials and components also kept climbing , mainly because of increases in the administered prices of steel and aluminium and power, and strong inflationary trends.The cost of imports also increased , because of the devaluation of the rupee against the dollar by 18% in July 1991, the need to provide margin money by importers and a requirement to buy EXIM scrips for imports. High interest rate and tightening of money supply ( Same measures are taken by present Governor of RBI 2 days ago) pushed up the cost of the production and also affected the demand for car loans, the interest on which increased by about 10 % in 1991-92. Reduced depreciation benefits on cars affected car purchases by companies and independent professionals.
Cars sales declined by 7 percent. While sales of other cars fell by 28 %, Maruti clocked a 6 % increase in the sales of its cars and increased its market share to 66 %. Maruti sales may also have turned negative since the sales of the Omni and the 1000 cc car were declining. However, we cut prices to maintain sales growth. The prices of the Omni, which had been raised by 8 % in December 1991, were reduced by 4 % in January 1992. Similarly, the price of the 1000 cc car was slashed by 6% in January 1992. The company still managed to make profit of Rs. 6.61 crore in 1991-92, though it was lower than the previous year's profit of Rs. 8.82 crore"
* Text in the bracket is my comment.
FROM THE BOOK The Maruti Story By R C Bhargava with Seetha - COLLINS Business.
No comments:
Post a Comment