Despite its focus on controlling costs and increasing production gradually, along with maintenance and research and development, Maruti Suzuki India (MSIL) has no plans to either impose pay cuts or slash jobs. The auto manufacturing company has, however, announced a reduced capital expenditure of Rs 2,700 crore for the current financial year. For the previous year, the capex was Rs 3,250 crore.
According to RC Bhargava, chairman, MSIL, the Company is confident that the economy will recover. It intends to begin by limiting production for a minimum of two months. Foreseeing higher demand as compared to supply, the Company does not plan on offering big discounts, as the production volume will be low for all auto manufacturers in the next couple of months.
About 1900 of Maruti workshops are functioning right now. The Manesar plant of MSIL has already resumed operations, and the plant at Gurugram will open by May 18. A third of the Company’s dealers have resumed work, with 60 per cent of them located in the rural areas. Many vendors happen to be located in the red zones, which will hamper business for some time. In addition, with workers having returned to their villages during the pandemic, and there being no means of communicating with them, the Company will be facing manpower issues too for a little while. The automaker has received more than 5,000 bookings, of which it has delivered 2,300.
Due to falling sales and the pandemic, MSIL experienced a dip in net profit of 28.1 per cent, to Rs 1,291 crore for the quarter ended March 31, 2020. In the previous year, it had earned a net profit of Rs 1,795.6 in the fourth quarter.
Revenue from operations has also declined by 15.1 per cent to Rs 18,198 crore in the fourth quarter of FY20, whereas it was Rs 21,459 crore in the fourth quarter of the previous financial year.