The country’s top five auto companies, including Maruti Suzuki, Bajaj Auto and Hero MotoCorp, are sitting on a large cash reserve of Rs 46,000 crore, thanks to increasing profitability. The five companies have improved their cash and cash reserves (including current investments) by 23 per cent in the first six months of 2016-17, taking the reserves in most of them to a new high.
Maruti Suzuki, the country’s largest carmaker, has a cash reserve and investment of Rs 23,800 crore as of September 30, Rs 4,600 crore more than it had on March 31, 2016, making it an increase of 24 per cent.
Pune-headquartered two-wheeler major Bajaj Auto is holding cash and cash reserves worth Rs 11,398 crore as on September 30, 25 per cent more, compared to March 31. Bajaj reported the highest half-yearly turnover; Ebitda (earnings before interest, tax, depreciation and amortisation) and profit in H1. Its consolidated profit in H1 was a record Rs 2,240 crore.
The cash reserve of the country’s largest two-wheeler maker, Hero MotoCorp, increased to Rs 4,000 crore as on September 30, against Rs 3,700 crore on March 31. The company invested Rs 850 crore in its R&D facility in Jaipur, which became operational early this year. Its capex of Rs 1,300 crore in 2016-17 will be in the upcoming plant in Gujarat.
Eicher Motors, which manufactures Royal Enfield motorcycles, has had the sharpest growth in the cash position. During the six-month period ending September 30, its cash reserve surged more than 39 per cent to Rs 2,945 crore. This comes again on the back of a record profit in H1. The company’s capex will be Rs 1,000 crore this year.
Utility vehicle and tractor major Mahindra & Mahindra (M&M) has also seen a 20 per cent surge in cash (including current investments) to Rs 3,945 crore as on September 30. Its profit grew 20 per cent in H1 to Rs 2,118 crore on the back of improving tractor and sport utility vehicle sales.
Maruti Suzuki announced a dividend of Rs 35 a share in 2015-16, 40 per cent more than 2014-15. The trend is likely to continue this year as well. Eicher doubled its dividend to Rs 100 last year. Some are trying to bring down borrowings.