India's largest carmaker Maruti Suzuki India (Ltd) on Wednesday reported a net loss of Rs 249.4 crore during Quarter 1 (April-June) of FY 2021 as production and sales activity remained closed for the most part of three month period. MSIL had reported a net profit of Rs 1,435.5 crore during Q1 of FY20.
Analysts had estimated the four-wheeler maker to report losses to the tune of Rs 350-450 crore for the June quarter. MSIL said losses were partially offset by lower operating expenses and higher fair-value gain on the invested surplus.
"Owing to the global pandemic of COVID-19, it was an unprecedented quarter in the Company’s history wherein a large part of the quarter had zero production and zero sales in compliance with a lockdown stipulated by the government," MSIL said in a statement.
It added, "Production and sales started in a very small way in the month of May. The Company’s first priority was the health, safety and wellbeing of all employees and associates across the value chain including its customers. Hence with carefully designed safety protocols, which went far beyond compliance levels, the production in the whole Quarter was equivalent to just about two weeks’ of regular working. The results have to be viewed in this context."
During the Quarter, the Company registered Net Sales of Rs 3,677.5 crore, from Rs 18,735.2 crore a year ago. MSIL sold a total of 76,599 vehicles during the Quarter as against 4,02,594 vehicles sold in the same quarter a year ago. Sales in the domestic market stood at 67,027 units. Exports were at 9,572 units.
On behalf of Board of Directors, Kenichi Ayukawa, MD and CEO of MSIL in a note said, "The Group's operations and financial results for the quarter ended June 30, 2020 have been adversely impacted by the outbreak of COVID-19 pandemic and the consequent lockdown announced by the Government of India due to which the operations were suspended for part of the quarter and gradually resumed with requisite precautions. The results for the quarter are, therefore, not comparable with those for the previous quarters."
He added that the Group has considered the possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of property, plant and equipment, Investments, Inventories, receivables and other current assets.
"In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Group, as at the date of approval of these financial results has used internal and external sources on the expected future performance of the Group. The Group has performed sensitivity analysis on the assumptions used and based on current estimates expects the carrying amount of these assets will be recovered. The impact of COVID-19 on the Group's financial results may differ from that estimated as at the date of approval of these financial results," Ayukawa said.