No major impact on production, demand steady: Maruti

Even as Maruti Suzuki India Limited (MSIL) is weathering the Covid-19 storm pretty well and production is on track, the company is not getting carried away. MSIL is well aware that the situation can change in these unprecedented times.

"So far, a few states have had lockdowns and their lockdowns also have had some exceptions. And we have not been impacted in terms of production so far,” said MSIL Chairman RC Bhargava during a media interaction recently.

Rising material cost is a big challenge for India’s biggest carmaker.

“If you look at our results in the last quarter, material cost went up by a little under three per cent and that is in one quarter. The prices we increased are not three per cent across the board even. But that is the way material prices are going and the impact it is having on our production costs. Precious metals have been the worst hit. Steel prices are going up for various reasons. We have to keep watching and taking decisions.”

However, tough as the situation may be, MSIL will continue what they had planned. “Investments are continuing as planned. We have not cut back on the capital budget. We have made no change in the capex due to Covid-19,” he stated.

“The demand situation has been consistently steady so far. If the situation continues, it should be a decent quarter for us. There are factors that we have to keep watching like how Covid-19 progresses, what kind of restrictions come, what impact they have and such issues. If they have an impact, what impact they will have is something we will have to see. I am unable to give a clear answer as to what the quarter will be like because of the uncertainties associated with Covid-19,” he added.

In reply to a specific question if rural demand has been hit, Bhargava said: “There is no evidence of that at all. And what I know is that Covid-19 is very much an urban disease. So, I won’t say that the rural demand will get affected by the pandemic at all.”

One of the big problems of the second wave has been the shortage of oxygen for the treatment of Covid-19 patients. “The oxygen situation is something that we have to keep a very close watch on. While we ourselves are very small users of oxygen, our vendors making components are much larger users of oxygen. So, we have to keep a watch as to what happens to the oxygen situation as we go forward and then take decisions accordingly.”

As far as the semiconductor shortage is concerned, Bhargava said: “The semiconductor crisis is not over at all. We are still dealing with it. It is something that is going to be there for some more time. And we are doing whatever we can in terms of finding alternatives and making model changes and various things. But the net result is that we have been able to carry on production so far. This problem will be there for some time and we will deal with it."