Conference Call with Maruti Suzuki Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen in to the full earnings transcript.
Highlights from Ajay Seth, CFO
Financial year 2019-20 began with considerable challenges with sluggish economic growth in India and worldwide. Weak credit growth and challenges in the financial sector slowed down economic expansion. This slowed down overall demand environment.
The government of India and RBI took some bold measures, and the economic environment started to show improvement in the latter part of 2019-20. However COVID19 brought the economy to a screeching halt. For the auto sector, all negative factors struck together with full force. We have not witnessed such a huge demand contraction.
Major factors that affected the sales: increase in selling price due to regulation, increase in insurance premium and taxes, reduced credit availability and increased downpayment requirements. Uncertainties among customers such as anticipation of GST reduction, shifts from BSIV to BSVI, kept customers indecisive.
At the end of the year COVID19 brought sales to a halt. The company increased efforts to reach out to customers. Targeted digital outreach was kept up. To ensure credit availability, the company tied up with leading commercial banks and rural banks. Maruti tied up with finance companies like Bank of Baroda, Kotak Mahindra, HDFC Finance and so on.
The company sold 8 lakh BSVI vehicles during the year. The company launched new models to cater to growing interest in the EV space. The shift towards petrol vehicles is more obvious now, with diesel share now falling below 20% market share. Petrol vehicle sales account for 94% of sales in Q4FY20. There is growing interest in CNG vehicles as well.
The company saw exports decline 6%, exporting 1,200,171 vehicles. Domestic and export together saw volume decline overall of 16.1% in FY20.
Capacity utilization fell much below that of the previous year. Higher sales plus weak utilization together significantly impacted profit margins. The company partially offset this by cost reduction measures. Net sales in FY20 saw a decline of 13.7% over last year. Net profit fell by 24.7% compared to last year.
In Q4FY20 saw volumes fall by 16%. Net sales fell by 17.1% and net profit fell by 28.1% YoY in this quarter.