Maruti Suzuki Q4 Net jumps 51% ₹1,875.8 crore

Board of Directors has recommended a dividend of ₹60 per share

Even as semiconductor shortage continued to impact production, Maruti Suzuki India on Friday posted a 51% jump in consolidated net profit to ₹1,875.8 crore for the January-March 2022 quarter, helped by higher vehicle prices and lower sales promotion costs.

The company, which has about three lakh orders pending from customers, doesn’t expect to be able to “completely liquidate” the waiting list this year as well owing to shortage of chips.

Speaking to reporters at a virtual press conference, the company’s Chairman R. C. Bhargava also hinted at a change in product strategy to move towards higher-end passenger vehicles as demand for entry level small vehicles – its bread and butter, is shrinking due to affordability issues.

“The worrying part of the market has been that over the past three years, the market at the lower end… for people who use either two-wheelers or smaller hatchback…that market has been shrinking considerably…Small cars used to be our bread and butter [but] there’s no butter in small cars anymore,” Mr. Bhargava said.

Noting that the hatchback segment has declined from 15.5 lakh units in 2018-19 to 11.5 lakh units in 2021-22, he said that there seems to be no likelihood of market reversing in near future. “There is no doubt now because of regulatory changes, taxes of state governments, increase in prices of commodities, the prices at the lower end of the market have increased proportionately by such a figure that a lot of customers have dropped out of the market… they can not afford a four-wheeler transport,” he said.

For Maruti Suzuki, which has earmarked a little over ₹5,000 crore as capex for the ongoing fiscal 2022-23, including expanding the capacity of its Manesar plant, the consolidated total revenue from operations stood at ₹26,749.2 crore as against ₹24,034.5 crore during the quarter under review.

Mr Bhargava said the company’s board has approved expanding the Manesar plant capacity by 1 lakh units at an investment of ₹161 crore and will be completed by April 2024. At present, the plant has an installed capacity of 8 lakh units annually.