Companies

Auto industry doesn’t require GST cut now: Maruti Chairman

Our Bureau New Delhi | Updated on October 29, 2020 Published on October 29, 2020

Company reports higher Q2 profit at ₹1,419 crore

Maruti Suzuki India (MSIL), India’s largest passenger car manufacturer, on Thursday said it is cautious about demand in the market after December, but added that the industry does not require any tax reduction — including in the GST — right now.

The company on Thursday reported a consolidated net profit of ₹1,419 crore for the second quarter ended September 30, up 2 per cent year-on-year (y-o-y) as against  the ₹1,391 crore in the year-ago period.

Total revenue from operations for the period also grew 10 per cent y-o-y to ₹18,755 crore compared to  ₹16,998 crore in July-September quarter last year.

Speaking to mediapersons post the results, RC Bhargava, Chairman, MSIL, said that the impact of people wanting to buy vehicles for personal use and festivals will be over by December.

“The rural segment will continue to grow substantially, but we don’t know how the urban demand will be, and how much income people in urban markets will be left with. I don’t see any strong urban demand after festive season since people can’t afford the vehicles,” he said.

On subsidies or tax reduction, especially GST cut, which the industry has been demanding from the government, Bhargava said that the tax reduction on vehicles is required as of now as there is demand in the market.

Having said that he also added that the government should come up with some stimulus packages for the auto industry next year, as the sales may drop sharply next year.

“Today, I am selling everything I produce, and if there is a sudden increase in demand due to tax cut then I would not be able to meet the demand,” Bhargava said.

Sales performance

During the July-September quarter, MSIL sold a total of 3,93,130 vehicles, higher by 16 per cent compared to the same period previous year. The sales in the domestic market stood at 3,70,619 units, higher by around 19 per cent. Exports were at 22,511 units, lower by around 13 per cent.

Bhargava said that the performance in this financial year has been affected by the unforeseen Covid-19 pandemic, otherwise the company have performed better. For instance, in the second quarter, “We would have done 5.30-5.40 lakh vehicles in second quarter, against what we done of around 3.70 lakh units,” he added.

The operating profit for the quarter was ₹1,168 crore, a growth of around 72 per cent over the same period previous year on account of higher sales volume, lower sales promotion expenses, lower operating expenses and cost reduction efforts partially offset by increase in commodity prices and adverse foreign exchange movement, it said.

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Published on October 29, 2020
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