The country's largest carmaker Maruti Suzuki India (MSI) on Wednesday reported a 27.77 per cent decline in consolidated net profit at Rs 1,322.3 crore in the quarter ended March 2020, hit by lower sales volume and increase in expenses.
The company had logged a net profit of Rs 1,830.8 crore in the January-March period of 2018-19
Meanwhile, the auto major said it has resumed production at its Manesar plant following easing of lockdown guidelines and may also start the Gurugram plant by May 18-19.
Net sales during the quarter declined to Rs 18,207.7 crore, down 15.2 per cent from Rs 21,473.1 crore in the year-ago period.
Total car sales during the fourth quarter declined by 16 per cent to 3,85,025 units over the same period of 2018-19.
Commenting on the results, MSI Chairman R C Bhargava reiterated that the auto industry has been going through a prolonged slump since last year and the slowdown had its impact on the company as well.
For the entire 2019-20 fiscal, MSI posted a net profit of Rs 5,677.6 crore, down 25.78 per cent from Rs 7,650.6 crore in 2018-19 fiscal.
Net sales last fiscal stood at Rs 75,660.6 crore as against Rs 86,068.5 crore in 2018-19.
Total volume sales during 2019-20 were down 16.1 per cent to 1,563,297 units. Of this, 1,02,171 units were exported, the company said.
The company said profitability was hit during the fiscal on account of lower sales volume, higher sales promotion expenses and higher depreciation expenses.
It was partially offset by lower operating expenses, cost reduction efforts, higher fair value gains on invested surplus and reduction in corporate tax rate, it added.
Sharing the company's progress on resumption of production after easing of lockdown guidelines, Bhargava said, "We have started production in Manesar. We will expand production for the second line sometime next week. We hope to start in Gurgaon around 18-19th of this month."
Addressing reporters via video conference, he, however, said the Gujarat plant has not started production due to active cases of COVID-19 in nearby areas.
Bhargava also said there are uncertainties about production as workers movement is still not free due to problems of permits from district authorities.
The component supplies also have uncertainties as it is unclear which area could become a containment zone when and which state allows whom to function, he added.
"We have about one-third of our dealers which have opened so far, 60 per cent of them are in rural areas and gradually we expect the remaining 2,000 dealers to open but it will take a little time," Bhargava said.
He further said, "We have actually received a little over 5,000 and about 2,300 cars have been delivered and 1,900 workshops are functioning but loads in these workshops have become very low during the lockdown period. This business will also pick up gradually."
When asked about outlook, he said, "Markets are also very uncertain at the moment. Nobody knows how the market will behave... There are so many uncertainties at the moment that there is no point in speculating when will we get pre 2019-20 volumes."
Asked if the company will cut salaries or jobs due to the coronavirus pandemic, he replied in the negative.
On the issue of migrant labours, Bhargava said its vendors are more likely to be impacted than MSI but production could be impacted.
He also asserted that MSI will not hold back on its Rs 2,900 crore capex for the fiscal despite the coronavirus crisis, saying that the company believes in the long-term potential of the Indian market.
When asked about the impact of coronavirus-induced lockdown on product development, MSI Managing Director and CEO Kenichi Ayukawa said the company is facing challenges and discontinuities in design and development, and the company will have to take stock if the programme gets affected.
"We will try to catch up," he added.
The auto major said its board has recommended a dividend of Rs 60 per share for 2019-20.
MSI shares were up 1.72 per cent at Rs 5,035.25 apiece on the BSE.