Maruti Suzuki resumed production at its Manesar unit and is working at more than 90 per cent capacity to make up for the loss. India’s leading auto maker expects that the 30,000-vehicle production loss will be made up in the course of the next few months. Speaking to Bloomberg TV India , Maruti Suzuki Chairman RC Bhargava says the company doesn’t expect any loss this year due to the production disruption. Over the course of the year, as the economy picks up and industry starts moving faster, the overall demand may also increase, he said.
Maruti has resumed production at its Haryana unit. How much of a dent will the production disruption have on our sales and profits?
We avoided the worst of the damage as we had advanced the maintenance shutdown to last week. We estimate the total amount of production loss — which has occurred and which will occur in the next few days because we are not fully utilising 100 per cent capacity — to be about 30,000 vehicles. And we expect to make up this loss in the course of the next few months. So overall we don’t expect any loss this year.
No, we don’t have inventory because the supplies were always just in time. Supplies have resumed because over this break of seven days, Subros was able to put most of their equipment in order, using their facilities at Noida and some other arrangements. That’s why we have resumed production. And the production is more than 90 per cent of capacity.
What is the waiting period for the newly launched models, Brezza and Baleno hatchback? Has that also increased?
It will temporarily increase because there was no production for a few days. But we resumed production on Monday. And I am not sure about the exact waiting period now; but it was around 6-7 months.
Are you also witnessing a strong momentum in the utility vehicle space? Are you planning to reduce the waiting period for Brezza?
No, we are making as many units as possible. But there are limitations on the manufacturer to make a particular model. It’s not so flexible that you can make whatever you want or in any number that you want.
With raw material prices on the rise, are you facing any increase in prices from suppliers?
Certainly, steel prices are going up and the kind of benefit we had in the past from falling prices is no longer there.
Monsoon is expected to be above average. So can we expect the domestic demand to overshadow the weakness OEMs are witnessing in the export market? What’s your outlook for FY17?
I don’t think there is any weakness in the export market. These fluctuations from month to month are an inevitable part of export. It’s not as if there is a great change in the demand for our products outside. So I still expect we will meet the target we set at the start of the year for the export market. And the monsoon should increase the rural demand for cars particularly. And over the course of the year, as the economy picks up and as the industry starts moving faster, the overall demand may also increase. But I don’t think it has any impact on export.