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Festival season is not going to be buoyant this year: RC Bhargava, Maruti Suzuki

Sales remained flat but compared to first quarter, profits went up and it is partly the result of non-operational profits, RC Bhargava, Chairman, Maruti Suzuki, tells ET Now.

Edited excerpts:

Are you happy with Maruti results in this quarter?

If you look at the whole half year, there is something very strange in the sense that in the first quarter of this half year, sales went up by 25%, the profits came down. In the second quarter, sales remained flat but compared to first quarter, profits went up and it is partly the result of non-operational profits or income from non-operational sources. In the first half, there was a lot of mark-to-market downwriting of some profits. This quarter was much better and thats what probably has made the bulk of the difference.

Going forward, what is your demand outlook? The festive season is also coming up. Can customers expect more discounts?

So far, the indications are that this festival season is not going to be particularly buoyant and our expectation is sales will be only marginally better than last year. Normally sales are expected to go up 10-20% in the festival season, but that is not happening this year.

We see that the rupee is quite volatile. Crude is also quite volatile. How do you see that impacting raw material costs? Will you be able to achieve the 10% growth you have projected?

The price of raw materials has gone up to some extent but in some areas, because of the China-US trade war, there has been softening of the market also because some surpluses have become available in the market.

The dollar impact continues to be negative and not so much the volatility of the rupee, it is the crude prices which have hurt the customers and their ability to pay for vehicles as well as the insurance requirement that three years premium should be paid in advance. All that have definitely hurt car buying sentiment.

Going forward it is difficult to predict but we have a target of getting double digit sales. We will make our best efforts in that direction but there are many external factors which impact the market. We have to see how they play out in the months to come.

You also mentioned that electrical vehicles are the next step when it comes to reduction of fuel consumption. But you have also said that it cannot happen overnight and that the move to CNG is also a big step. When can we see the electric Wagon R coming to India? Also, will the battery facility come out of the Gujarat plant?

Suzuki and Toshiba and Denso are doing the battery plant in Gujarat. That is very much a project which is in progress. The market in India requires all kinds of technologies to deal with this problem of rising import of crude oil, high cost of crude oil, the emission of CO2, these have to be dealt with and they cannot be dealt with any one single technology.

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