The one-time impact refers to the withdrawal of indexation benefits while calculating long-term capital gains from debt mutual funds, which were purchased before April 1, 2023 during Budget 2024.
Maruti Suzuki stated that it was making accounting provisions for deferred tax liability on fair value gains from these investments in accordance with Ind AS-12. Now, due to withdrawal of indexation benefit and a change in tax rate from 20% plus surcharge and levy to 12.5% plus surcharge and levy without indexation, the accounting provision for deferred tax liability will have to be restated.
The passenger carmaker also said that tax payment would be made at the time of redemption of these funds and the tax amount could differ from the original amount of ₹850 crore, depending on the actual profit and the actual applicable tax rate at the time of redemption of these funds. For the June quarter, Maruti Suzuki had a consolidated deferred tax expense of ₹103.7 crore as per its income statement.
“This is not related to operations and will not impact our operating profit. It will impact tax on other income on the respective future dates when we redeem those funds,” said Rahul Bharti, head of investor relations.
Maruti Suzuki’s net profit for the quarter rose 47% year-on-year to ₹3,650 crore, which turned out to be higher than the CNBC-TV18 poll estimate of ₹3,272 crore.
Revenue for the quarter also rose 10% over the same quarter last year to ₹35,531 crore, which was also higher than the estimate of ₹34,565 crore.
EBITDA margin for the quarter expanded by nearly 350 basis points to 12.5% from 9.2% in the base quarter. Maruti Suzuki’s margins were expected to increase by 220 basis points due to a lower base and low raw material costs.
Shares of Maruti Suzuki India closed little changed at ₹12,207 on Friday. The stock is up nearly 20% so far in 2024.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.