Mumbai: Auto parts maker Amtek Auto expects consolidated net profit to rise by 40%-50% for the fiscal ending June, as cost cutting measures kick into a resurgent domestic market, a senior official said.
“Our profits may grow between 40% to 50% this year... profits would grow much faster than sales,” Santosh Singhi, chief financial officer, told Reuters on Friday.
Amtek Auto had reported a consolidated net profit of Rs1.9 billion for the year ended June 2009, he said.
Amtek’s overall sales would rise 15%-20% with a damp overseas market, especially US and Europe, offsetting a boost in domestic sales.
“This year, overseas market may remain flat or grow marginally,” he said.
The firm has cut exposure to overseas market from where now it gets about 40% of consolidated revenues compared with over 60% a year ago.
“Orders are pouring into the domestic market. There is tremendous sales pressure, we are flooded with orders. Our plants are running at 90% levels”.
The Indian automotive industry has seen a scorching pace of growth as vehicles sales are expected to reach a record high for the second year in a row in 2010/11, with incomes in a rapidly growing economy boosting demand.
As a result Indian auto makers and their vendors are struggling to keep pace.
Amtek Auto, which counts Ford, General Motors and almost every major Indian manufacturer as customers, will raise its forgings capacity to 425,000 tonnes in six months from 300,000 tonnes now and also expand aluminium castings capacity, he said.
“The target is now to further increase our sales and profits. Everyone is working overnight to utilise the maximise capacity,” he said.
It commissioned a plant at a tax holiday zone in Rudrapur in Uttarakhand to cater to auto makers such as Tata Motors and a new manufacturing line in Chennai in Tamil nadu at an investment of about Rs500 million.
Over the past year, Amtek has restructured overseas operations by merging some units and relocating others in India, helping it save overhead costs.
“We have reduced our establishment expenditure by about 30% and we are achieving the same level of sales. This is also helping us boost performance”.
Amtek Auto, earlier on Friday had reported a consolidated net profit of Rs852.3 million for the quarter ended 31 March, versus Rs244.3 million last year.
Its sales rose to Rs9.7 billion compared with Rs7.4 billion.
Amtek Auto shares touched a days high of Rs189.5 shortly after Reuters reported the consolidated results. They ended up 2% at Rs186 in a firm Mumbai market.