Kia's Indian business has been profitable in its third year of operations, a feat not even most incumbents with a larger market share have managed, demonstrating that carmakers can profit in India if they get their strategy right. 

According to a filing with the corporate affairs ministry (MCA) shared with ET by business information portal Tofler, Kia India made a profit after tax of Rs 1,111 crore in FY20, compared to a loss of Rs 329 crore in FY20.

Despite a Covid-affected fiscal year, Kia's total revenue increased by 87 percent to Rs 20,290 crore last fiscal year. Last year, this amounted to 10% of the total expected passenger automobile sector income. In FY21, the company's volume of sales increased by 90% year after year to 196,000 units.

During its four-year capital investment in India, the maker of the Seltos and Sonet SUVs has recouped approximately half of the total loss.

Despite the Covid-19 pandemic and resulting lockdowns, Kia was able to increase revenues by over 80% and operating profits by over 400% in FY21, thanks to optimal plant utilization and increased realization from its SUVs. 

This has allowed it to close the gap between itself and the incumbents.

In FY21, Kia's India revenue was similar to 30% of market leader Maruti Suzuki and half of second-placed Hyundai India. Its net profit is similar to 26% of Maruti Suzuki's, and it sold roughly 13% of the market leader's sales volume.

With strong demand for its models, the company has a robust order book of over 50,000 units, with a three-month wait time.

According to a presentation by parent Kia Motors, India operations accounted for 5.8% of Kia's global income in 2020, up from 3.8 percent a year earlier

Kia posted an operational profit per vehicle of Rs 91,390, the most among India's mass-market carmakers and roughly Rs 9,000 less than leading luxury carmaker Mercedes India, thanks to strict cost control despite cost inflation and positive operating leverage.

Kia Motors India has the highest return on equity (RoE) ratio of 22.79 percent among Indian carmakers in FY21, a result that may cause some multinational carmakers to reexamine their India strategy and reconsider the concept that India is a value-sensitive market with low return expectations.

Kia's average car realization is Rs 10.43 lakh, which is 2.26 times higher than Maruti Suzuki and 146 times higher than Hyundai Motor.

Its cumulative sales have surpassed 300,000 units in just two years, and the company has stated that it would be able to sell the remaining 100,000 units in FY22.

With a new MPV codenamed KY on the anvil, Kia's present plant in Anantapur, Andhra Pradesh, is ready to deliver a 300,000-unit annual volume. To boost output, the company is likely to add a third shift soon.