Trying to beat the odds: Maruti Suzuki sticks with ₹2,700 cr capex plans

Maruti Suzuki India Ltd will hold its ₹2,700 crore capital consumption plan for this year, unfazed by the slowdown brought about by the coronavirus pandemic that has affected vehicle deals and profit of the company.

The largest carmaker in India is also planning to reopen its second factory in Haryana, following further guidelines by the government of a country-wide lockdown. Maruti started constrained tasks at its factory in Manesar, Haryana on 12th May and a portion of its showrooms and administration centres started working a week ago.

The lockdown has hit the Suzuki Motor Corp. unit as the company’s net benefit increased by 28% in the March quarter to ₹1,291.7 crore from ₹1,795.6 crore a year prior. Profits were hardly more than ₹1,273.40 crore as estimated in a study. During the quarter, deals have fallen from 17% to ₹17,186.7 crore because of a 16% fall in vehicle deals to 385,025 units.

Profit before interest, operating profit, Ebitda and devaluation, decreased 33.9% year-on-year to ₹1,546 crore last quarter while operating margin contracted 241 premise focuses to 8.5% because of an expansion in aggregated costs.

R.C. Bhargava, chairman of Maruti Suzuki, said the organization will attempt to continuously increase vehicle creation regardless of an increase in fixed expenses because of extra security protocols. In addition to this he also said that the company is aiming to plan for long term purpose which is one of the main reasons why they can’t afford to stop capex investments.

“The migration of labour from cities will affect our vendors since they hire much more contractual labour force than us. So, it will somehow impact our production”, he said.

Bhargava didn’t expand on the venture plans. As per the analysts, the organization will spend the capital on the development of the products, plants and purchasing real estate for dealerships.