Maruti Suzuki India Ltd on Wednesday reported a 28% year-on-year decline in its net profit for January-March (Q4) largely because of tepid demand for its cars exacerbated by a nationwide Lockdown to contain the spread of Covid-19.
The country’s largest passenger vehicle manufacturer net profit was at ₹1,291.7 crore compared with ₹1795.6 crore in the year-ago quarter.
The company’s net sales during the quarter declined 17.1% to ₹171,86.7 crore – a result of 16% decline in total vehicle sales during the quarter to 3,85,025 units.
Operating profit during the period fell 31.7% to ₹1,546 crore crore while margins contracted 200 basis points to 8.5% due to increase in overall expenses.
Automobile manufacturers across the country had to suspend operations at their factories, beginning 22 March, following government directives amid the covid-19 pandemic.
Maruti, however, during the time was working with its suppliers and dealers to create standard operating procedures (SOPs) that need to be followed once manufacturing and retail operations resume.
The New Delhi-based vehicle manufacturer started production at its Manesar factory on 12 May, and is soon likely to resume operations at its plant in Gurgaon as well.
This follows the relaxation in lockdown rules by the Centre to help revive the economy.
The maker Alto and Swift hatchbacks had a rough FY20 due to contraction in consumer demand as a consequence of the economic slowdown and increase in vehicle prices due to change in emission and safety norms.
The virus outbreak added to the misery of vehicle manufacturers, with retail sales crashing in March as customers almost stopped purchases.