The country's largest car maker Maruti Suzuki India (MSI) on Thursday posted a two per cent increase in its consolidated net profit at Rs 1,419.6 crore for the three months ended September, mainly driven by higher sales.
The auto major had a consolidated net profit of Rs 1,391.1 crore in the July-September quarter of the previous fiscal.
Total revenue from operations rose by 10.34 per cent to Rs 18,755.6 crore in the latest September quarter. In the year-ago period, the same stood at Rs 16,997.9 crore, MSI said in a statement.
MSI Chairman R C Bhargava told reporters that the second quarter has been much better than the first quarter which had witnessed zero production for about two months.
"Similarly, as compared to the same quarter last fiscal, we have performed better," he noted.
However, he also said the company's performance has been better during the period under review on a low base of July-September period last year.
"The reason why the company has performed better is that last year itself was a year when MSI went down 16 per cent and the industry went down 18 per cent. This 16 per cent fall happened when normally we would have been growing by 10-12 per cent," Bhargava said.
On a standalone basis, the company posted a net profit of Rs 1,371.6 crore in the latest September quarter compared to Rs 1,358.6 crore in the same period of the previous fiscal.
Net sales stood at Rs 17,689.3 crore for the period under review, up 9.7 per cent from July-September period of 2019-20.
The firm said it sold 3,93,130 units during the September quarter, a growth of 16.2 per cent over the year-ago period. This includes 3,70,619 units in the domestic market, a growth of 18.6 per cent compared to the same period a year ago.
Exports during the quarter stood at 22,511 units, a decline of 12.7 per cent over the same period of the previous fiscal.
Comparing the current market scenario with the situation a few years ago, he said that in the second quarter of 2018-19, the company sold 4.55 lakh units as compared with 3.7 lakh units in the second quarter of the current fiscal.
"So, we are actually 85,000 vehicles lower than our performance two years ago in the same period... if two years ago, we were selling 4.55 lakh vehicles, then, we should have been around 5.3-54 lakh units this quarter and that should put revival extent in front of everyone," Bhargava said.
On the outlook for the next few months, he said that COVID-19 situation has been improving in the country over the past few weeks.
"Production in our factories is now normal. October is going to be a good month of production and sales. Gujarat plant is also running on two shifts and that is why I think this month will see good sales," Bhargava said.
He added that November with various festivals lined up and December with year-end schemes look good in terms of sale prospects.
"After that situation is hard to predict because the impact of festival season will be over. Further to a large extent, the demand for personal vehicles, which is strong right now due to COVID-19, would get over," Bhargava noted.
Counting the positives, he said that rural areas would continue to grow substantially even going ahead.
"We don't know how COVID-19 situation would develop. We also don't know how income levels would be in urban areas, how much purchasing power is left with people in urban areas because of the economic downturn," Bhargava said.
"GDP growth this year is expected to be near zero (or) so. With that situation, I don't see there can be a spurt in sales in urban areas. People don't want cars not because they don't want a car but because they cannot afford the car," he added.
Bhargava said the government understands the importance of the auto industry for creating jobs and for growing manufacturing. "Keeping that in mind, I think the government will keep the question of demand creation very much in their mind when further policies, stimulus decisions are taken in the coming months," he noted.
Maruti Suzuki India shares ended at Rs 7,114 on the BSE, down nearly 1 per cent from the previous close.