India's largest carmaker Maruti Suzuki India has reported its worst ever performance in a quarter logging a loss for the first time in the first quarter of this fiscal. The company has registered a net loss of Rs 249.4 crore.
The results indicate the fallout of the spread of the pandemic during the last three months that saw a complete lockdown in the month of April and as a result, zero sales by the company during the month. During the quarter as a whole, Maruti managed to sell only 76,599 units, which are less than half of what it sold at its peak in just one month. In the first quarter of fiscal 2020, the company had sold 402,594 units.
"Owing to the global pandemic of COVID-19, it was an unprecedented quarter in the Company's history wherein a large part of the quarter had zero production and zero sales in compliance with a lockdown stipulated by the government. Production and sales started in a very small way in the month of May," the company said in a statement. "The Company's first priority was the health, safety and wellbeing of all employees and associates across the value chain including its customers. Hence with carefully designed safety protocols, which went far beyond compliance levels, the production in the whole quarter was equivalent to just about two weeks' of regular working. The results have to be viewed in this context."
Net sales for the company during the quarter stood at Rs 3,677.5 crore, an over 80 per cent decline compared to the first quarter of fiscal 2020. During that quarter, the company had reported a net profit of Rs 1,435.5 crore which itself was 27.3 per cent lower than that in Q1 of 2018-19.
The company has seen many troughs in the past including weak performance between 2011 and 2013 when multiple labour unrest at its Manesar factory crippled its production. It also suffered like others in the aftermath of the global financial crisis of 2008 but even then it always managed to stay in black. The pandemic has blotted that peerless record.
India's domestic passenger vehicle industry saw its worst ever performance in over a decade in fiscal 2020 with an 18 per cent decline in sales but is slated to perform even worse this fiscal when sales are set to decline by another 26-45 per cent. Industry body SIAM has said that the downturn of 2019-20 and the pandemic-induced recession of 2020-21 has pushed the industry back by more than a decade and it may take up to 2023-24 to recover to the levels last seen in 2018-19.
Maruti's financial numbers are a sobering reality check for the industry at large. With its wide dealership network and robust portfolio of entry level cars, Maruti is expected to perform much better than other players in the market in the recovery phase. For others, the pain maybe a lot more intense.