Maruti shows the way, sales rise after 7 mths
The jump marks the first sign of a recovery among carmakers
MUMBAI: Domestic wholesales at India’s largest carmaker, Maruti Suzuki India Ltd, rose 4.5% in October from the year earlier, the firm said on Friday, to become the first automobile manufacturer in the country to report growth amid an economic downturn.
Maruti Suzuki’s despatches to dealers stood at 144,277 units in October compared to 138,100 units in the same month last year. Its despatches of passenger vehicles rose 2.3% to 139,121, growing for the first time since March. In September, the carmaker had reported a 27% fall in despatches.
This is the first instance in FY20 where the carmaker has reported positive year-on-year (y-o-y) growth, partly triggered by a surge in festive demand and partly on account of a low base from last year.
It was the only carmaker to report wholesale growth on Friday, driven by increased despatches of its compact cars, utility vehicles (UVS) and its light commercial vehicles, even as its entry-level, or the most affordable category, continued to report a y-o-y decline. It sells Wagonr, Celerio, Swift, Swift Dzire, Baleno and Ignis models in its compact portfolio. Its UVS comprise Vitara Brezza, S-cross, Ertiga and XL6.
Maruti Suzuki has also supplied 2,727 units of its compact hatchback Baleno to Toyota Kirloskar Motor Pvt. Ltd, which sells a rebadged version as Glanza.
“The retail sales were far better than the wholesales and the company delivered close to 48,000 cars on Dhanteras alone. This was the highest single-day deliveries in the past 3-4 years,” Shashank Srivastava, head, sales and marketing, Maruti Suzuki, said in an interview.
Srivastava added that festive retail sales this year saw doubledigit growth over last year. “The newly launched S-presso model has now accumulated more than 20,000 bookings, averaging about 750-800 units per day,” he added.
While Maruti Suzuki plans to roll back its discounting initiatives November onwards, Srivastava said certain promotional schemes will continue in order to attract customers to showrooms.
Monthly wholesale figures reported by other carmakers on Friday were more muted than Maruti Suzuki’s.
The country’s second-largest carmaker, Hyundai Motor India Ltd, reported total domestic passenger vehicle wholesales of 50,010 units, down 4% y-o-y.
Gaurav Vangaal, country lead, light vehicle production forecasting, IHS Markit, said: “Retail sales are directly linked with the festive demand even as wholesales continue to post y-o-y decline on inventory correction measures by the carmakers. The retail uptick is a clear result of pent up demand for cars as buyers were delaying their purchases on several factors.” Vangaal suggested that Maruti Suzuki’s early move to cut production and correct its inventory across dealerships resulted in it registering positive wholesales for October.
Mahindra and Mahindra Ltd (M&M) reported passenger vehicle wholesales of 18,460 units, down 23% y-o-y. However, Veejay Ram Nakra, chief of sales and marketing, automotive division, M&M, said retail volumes exceeded wholesales by almost 40% last month. “Our billing numbers are in line with what we had planned for the month, since the objective was to significantly correct our channel inventory,” he added.
Retail sales in October were highest ever for any month for M&M, said managing director Pawan Goenka. “I hope the retail momentum in October is an indicator of sentiment turning positive,” he tweeted.
Stressing on the importance of reporting retail figures, Anand Mahindra, chairman, Mahindra Group, said: “The industry really needs to switch to reporting retail and not wholesale volumes. There are some strong signs of life in the market. And pipeline stocks have been slashed by controlling billings to dealers. Very appropriate stock levels now.”
At 13,169 units, Tata Motors’ passenger vehicle wholesales were down 28% y-o-y. In a statement, Mayank Pareek, president, passengervehiclesbusinessunit, said that retail sales were 36% more than wholesales, and the company has reduced its network stock by 38%.
MUMBAI: A four-year-long probe by the income tax department has gone against six Tata trusts and their licences have been cancelled, the group said in a press statement late on Friday.
The six trusts facing the action are Jamsetji Tata Trust, RD Tata Trust, Tata Education Trust, Tata Social Welfare Trust, Sarvajanik Seva Trust and Navajbai Ratan Tata Trust.
The probe was launched in 2015 following a 2013 report by the Comptroller and Auditor General. In the report, the CAG said Jamsetji Tata Trust and Navajbai Ratan Tata Trust had invested ₹3,139 crore in “prohibited modes of investment”. It said the tax department had given “irregular tax exemptions” to these trusts, resulting in a loss of ₹1,066 crore to the exchequer.
Following this, in 2015, the trusts decided to surrender their registration. In July this year, the taxman served a show cause notice, questioning the surrender of the licence and seeking to reopen the tax assessment case.
Under the Income Tax Act, when a trust surrenders its licence it needs to pay the tax on its accumulated income. In its reply, Tata Trusts said the provision could not be applied to them.
“The Trusts would like to clarify that this order of cancellation is a culmination of the decision taken by these six Trusts in 2015 to surrender, of their own volition, their registration under the Income Tax Act and to not claim the associated income tax exemptions,” Tata Trusts said in the press statement issued on Friday.
The decision to surrender the registration (an option available in law) was taken in the best interests of the trusts and to maximize the resources available to them, it added.