Even as semiconductor shortages continued to impact production, Maruti Suzuki India on Friday reported a 51% rise in consolidated net profit to £1,875.8 billion for the January-March 2022 quarter, helped by higher vehicle prices and lower promotional costs .
The company, which has around three lakh orders pending from customers, doesn’t expect to be able to “completely liquidate” the waiting list again this year due to the lack of chips.
Speaking to reporters at a virtual press conference, company chairman RC Bhargava also hinted at a shift in product strategy toward higher-end passenger cars as demand for small, entry-level vehicles — their bread and butter — shrinks due to affordability issues.
“The worrying part of the market was that over the last three years the lower end market … for people who use either two-wheelers or smaller hatchbacks … that market has shrunk significantly … Small cars used to be our bread and butter [but] there is no more butter in small cars,” said Mr. Bhargava.
Noting that the hatchback segment has declined from 15.5 lakh units in 2018-19 to 11.5 lakh units in 2021-22, he said there is no likelihood of a market reversal in the near future seems to. “There is no doubt that due to regulatory changes, state government taxes, increased commodity prices, prices at the lower end of the market have increased proportionally by such a number that many customers have dropped out of the market … You cannot imagine transport on four wheels afford,” he said.
For Maruti Suzuki, which has earmarked just over £5,000bn in investments for the current 2022-23 financial year, including expanding the capacity of its Manesar plant, total consolidated sales from operations came to £26,749.2bn in the 2022-23 financial year Compared to £24,034.5 billion during the fiscal quarter under review.
Mr Bhargava said the company’s board has approved the expansion of Manesar’s plant capacity by 1,000 units at an investment of £1.61 billion and is due to be completed by April 2024. The facility currently has an installed capacity of 8,000 units per year.
Total vehicle sales in the reporting quarter were 0.7% lower at 4,88,830 units. While domestic sales fell 8% to 4,20,376 units, exports were an all-time high at 68,454 units.
For the year ended 31 March 2022, the company’s consolidated net profit fell 11.6% to £3,879.5 billion, while total consolidated revenue from operations rose 25% to £88,329.8 billion.
Prices of commodities such as steel, aluminum and precious metals have seen unprecedented increases this year, the company said, adding it has been forced to raise vehicle prices to partially offset the impact.
Mr Bhargava added that while the company has had very few new product launches due to COVID-19, there will be a “number of product launches” this year.
The company said its board of directors paid a dividend of £60 per share (par value of £5 per share), compared to £45 per share for the 2020-21 financial year, as a “special one-off gesture to thank shareholders for their patronage and support.” , as the company celebrates its 40th anniversary”.
On exports, Mr Bhargava said: “Significantly, our export earnings are around US$880 million, while what we now import has fallen to £350 million.” Part of this reduction is due to the company’s all pays its royalties to parent company Suzuki in rupees, he said, adding that the company expects to maintain export levels in the current fiscal year.
