Maruti Suzuki, India’s largest carmaker, has reported a marginal year-on-year growth in net profit for the quarter ended September 30. This has been attributed to the lifting of the Covid-19 lockdown facilitating demand recovery, the improvement of capacity utilization and the restoration of its supply chain. In the preceding April-June period it had recorded its first quarterly loss since it went public in 2003.
The automobile major posted a profit of 13.7 billion rupees (US$184 million) this year, a growth of 0.95% (13.58 billion rupees) from the corresponding quarter last year. Revenue for the second quarter surged 10.35% year-on-year to 187.44 billion rupees ($2.51 billion), up from 170 billion rupees last year, on the back of higher sales.
Maruti Suzuki sold 393,000 vehicles this quarter, up 16.2% from last year’s 370,000 units. Compared with the preceding April-June quarter, when the country underwent a two-month long lockdown to contain the spread of Covid-19, the volume growth is a whopping 413%.
The company said that during the first quarter its performance was significantly affected by Covid-19-related disruptions. However, in the second quarter, it fared better on the back of some demand recovery and a gradual improvement in supply conditions. “Production across the company’s factories and supply chain was progressively ramped up, consistent with our policy of maximum safety of the people and following all prescribed protocols to ensure this,” it said in a press release.
Maruti said that higher sales volumes leading to improved capacity utilization, lower sales promotion and advertisement expenses, lower operating expenses and cost-reduction efforts helped improve the margin. It cited adverse commodity prices and foreign exchange fluctuations as factors that negatively impacted margins.
However, the company failed to meet street expectations, as many of them were expecting double-digit growth in net profit on the back of impressive sales figures. Analysts at HDFC Securities and Nomura had expected an 11% rise in profit for the second quarter, while those at Sharekhan and Emkay had pegged it at 19% and 12.6%, respectively.