Maruti Suzuki, India’s largest maker of passenger vehicles, reported a 4.3% decline in its quarterly net profit to ₹3,711.1 crore—despite making its highest-ever vehicle sales in the quarter of 604,635 units—as higher material costs and discounts weighed on results. The board approved a dividend of ₹135 per share.

The company recorded quarterly net sales of ₹38,849 crore, a 5.9% increase over last year. Along with material costs, it recorded expenses related to its new greenfield plant in Haryana's Kharkhoda along with higher sales promotions—including discounts—and advertising expenses, according to its investor presentation.

Earlier this month, the board approved a ₹7,410-crore investment to set up the third plant in Kharkhoda with a capacity of up to 2.5 lakh vehicles per year to tap growing domestic demand and exports. The existing capacity at Kharkhoda stands at 2.5 lakh units per year, which is mostly utilised to manufacture the company's Brezza SUV. Another plant with a capacity of 2.5 lakh units per year is under construction. This proposed capacity addition would be up to 2.5 lakh units per year. With this addition, the capacity at Kharkhoda is likely to reach 7.5 lakh units per year by 2029.

For the full year, it recorded net sales of ₹145,115.2 crore, a 7.5% increase over the previous year. Its full-year domestic sales grew modestly by 2.7% to 19,01,681 units, reflecting the ongoing mute sentiment in the larger automobile industry. However, its exports jumped 17.5% to 3,32,585 units. 

“This year, the domestic market growth was quite muted. For the Company, a modest domestic sales growth of 2.7% was compensated by a healthy 17.5% export growth leading to an aggregate growth of 4.6% for the year,” the company said in a statement. The board has also approved a dividend of ₹135 per share.

The increase in sales has been on the back of utility vehicles—that includes SUVs and MPVs—grabbing a larger share of its sales. While most of its other segments—including the compact and mini segment, which were once considered the company’s bread-and-butter, according to chairman RC Bhargava—the sales of the utility vehicles grew 12.1% in the year and now makes for 37.9% of its domestic vehicle sales.

Shares of Maruti Suzuki ended 2% lower at ₹11,650.