New Delhi: Country’s largest carmaker Maruti Suzuki India Ltd will add a capacity of 500,000 units over the next few months at its two plants in Haryana and Gujarat as it rushes to meet high demand after goods and services tax cuts delivered its highest ever quarterly revenue.
New Delhi: Country's largest carmaker Maruti Suzuki India Ltd will add a capacity of 500,000 units over the next few months at its two plants in Haryana and Gujarat as it rushes to meet high demand after goods and services tax cuts delivered its highest ever quarterly revenue.
The maker of Grand Vitara recorded a 4% year-on-year rise in profit after tax to ₹3,879 crore, hit by a one-time provision of ₹593 crore owing to the new labour code. Revenue during the quarter surged 28% to ₹50,959 crore on the back of the highest-ever quarterly sales of 667,769 units.
The company told analysts during the earnings call on Wednesday that it is preparing to add a cumulative 500,000 capacity this year, 250,000 each at its Kharkhoda facility in Haryana by April, and an equal volume at Hansalpur in Gujarat soon after.
"The primary driver of our sales volume growth in Q3 compared to the same period last year has been the small car segment in the 18% GST bracket. Fortunately for Maruti Suzuki, the demand is robust across the whole spectrum. We had to work on Sundays and holidays to meet the demand," Rahul Bharti, senior executive officer-corporate affairs at Maruti Suzuki, told analysts and investors.
"With this, we ended Q3 with a very low network inventory of just about three to four days, along with a healthy order book of around 175,000 vehicles," he added.
Maruti Suzuki is the first carmaker to announce its results for the October to December quarter, which recorded higher sales across companies. According to Society of Indian Automobile Manufacturers (SIAM) data, passenger vehicle sales grew 21% year on year to 1.27 million units.
The small-car giant had announced price cuts over and above the 10% GST relaxation the government had implemented in September. According to its commentary, small cars drove a large part of its incremental growth during the quarter.
Domestic sales of the company increased from 466,993 units a year earlier to 564,669 units during the October to December quarter. The small car segment, which includes mini and compact cars, accounted for three-fourths of the 97,676 increase in domestic dispatches recorded by Maruti.
The company had previously said that it was forced to curtail production of some models to meet all the orders for small cars.
"If we are producing more small cars, we have to sacrifice some other models. So, in order to serve our customers on a turn-by-turn basis, we are trying to produce the models, and we are delivering them to customers," Partho Banerjee, senior executive officer-sales and marketing, said on 1 January during a media conference.
While the industry is optimistic that the growth momentum will sustain, Bharti told analysts that a detailed assessment is needed.
"The query remains in our mind: what is the sustainable level of demand after the euphoria is over? So, I think in about a few months from now, we will again do a careful review and a careful assessment of what is the sustainable level of demand in the next year and in the next few years," Bharti said, answering a query about the outlook over the next few months and the upcoming financial year.
Shares of Maruti Suzuki closed 2.4% lower on Wednesday after the company announced its results during market hours, compared with a 0.7% gain in the Nifty Auto index.