- On Wednesday, Maruti Suzuki India Ltd announced a net loss of approximately €2249.9 crore for the quarter ending June 30 due to a substantial decline in vehicle sales
On Wednesday, Maruti Suzuki India Ltd announced a net loss of approximately €2249.9 crore for the quarter ending June 30 due to a substantial decline in vehicle sales due to COVID-19 related disruptions. Higher other income and lower taxes paid during the quarter have been effective in raising the losses sustained over the period.
During the year-ago era, the country’s largest passenger vehicle manufacturer posted a net profit of some 1435.5 crores.
Net sales of the company declined 79.2 percent year-on-year to 4106.5 crores during the first quarter of FY21. Total vehicle sales dropped by nearly 79 percent to 36775 units in the given period.
The net loss was about 863 crore compared to a profit of some 2047.8 crore due to higher fixed costs such as expenses for supplies and employees.
Certain income in the April-June quarter rose 57.61 percent to around ~11318.8 crores, which helped Maruti Suzuki reduce the losses.
It was an unprecedented quarter in the company’s history as a result of the COVID-19 pandemic, in which a major part of the quarter had zero production and zero sales in line with a government-stipulated lockdown, Maruti Suzuki said in a statement.
Automotive manufacturers around the country had to suspend operations at their factories beginning on March 22, following government orders amid the pandemic of COVID-19.
The New Delhi-based manufacturer announced a wholesale of only 13,865 units during the month after resuming production at its Manesar-based factory on 12 May. Factory dispatches increased dramatically in June to 51274 units as demand for their entry-level vehicles started to pick up.
The manufacturer Alto and Swift hatchbacks had a tough FY20 due to a downturn in market demand due to the economic recession and an increase in car prices due to improvements in emission and safety standards.
The company said its net loss in the quarter was partially offset by lower operating costs and greater benefit in fair value on the surplus invested.
The group considered the possible impact of the COVID-19 pandemic on the carriage of land, plant and equipment, deposits, inventories, receivables, and other current assets.
“The organization, as at the date of approval of these financial results, used internal and external sources on the expected future performance in establishing the assumptions about potential future uncertainties in the global economic conditions due to this pandemic,” the company said.
Maruti Suzuki’s shares were down 1.85 percent at Rs 6,170.95 after the announcement of results, while Sensex’s benchmark was down 0.96 percent at 38,124.20.