Hindustan Times (Jalandhar)

Maruti sticks with ₹2,700 cr capex plan

- Malyaban Ghosh malyaban.g@livemint.com

NEW DELHI: Maruti Suzuki India Ltd will retain its ₹2,700 crore capital expenditur­e plan for this financial year, undeterred by the turmoil caused by the coronaviru­s outbreak that has dented vehicle sales and earnings.

India’s largest carmaker also expects to soon reopen its second factory in Gurugram in Haryana, following further easing of curbs by the government of a nationwide lockdown imposed since late-March. Maruti began limited operations at its Manesar plant in Haryana on May 12 and some of its showrooms and service centres also begun functionin­g since last week.

The covid-19 pandemic and lockdowns hit the Suzuki Motor Corp. unit as its net profit plunged 28% in the March quarter to ₹1,291.7 crore from ₹1,795.6 crore a year ago. Profit was marginally more than the ₹1,273.40 crore estimate in a Bloomberg survey of analysts. Sales during the quarter fell 17% to ₹17,186.7 crore due to a 16% fall in vehicle sales to 385,025 units.

Operating profit, or the earnings before interest, taxes, depreciati­on and amortisati­on (Ebitda), fell 33.9% year-on-year to ₹1,546 crore last quarter while operating margin contracted 241 basis points to 8.5% due to an increase in overall expenses.

RC Bhargava, chairman of Maruti Suzuki, said the company will try to gradually ramp up vehicle production despite an increase in fixed costs due to additional safety protocols.

“We are planning for the long term, and that’s why we cannot afford to stop capex-related investment­s,” he said. “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 production.” Bhargava, however, did not elaborate on the investment plans.

For the year to March, Maruti reported a 25% drop in net profit to ₹5,650.6 crore and a 12% drop in revenue at ₹75,610.6 crore.

 ?? BLOOMBERG ?? The carmaker’s profit plunged 28% to ₹1,291.7 crore in the March quarter.
BLOOMBERG The carmaker’s profit plunged 28% to ₹1,291.7 crore in the March quarter.

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