Maruti Suzuki Q2 Results Miss Estimates: Chairman RC Bhargava Reacts

That has been there for the last many years, Tamanna. I talked about it even earlier that if we do not do something which will revive this sector and which will enable the owners of scooters and we have some 270 million or something scooter owners in India to be able to afford to move up to a four-wheeler which is safer, more convenient, better for their families, then we will have a problem of various kinds which will affect the growth of the car industry, which will affect the quality of life of such a large number of scooter owners and that is something which has been there worried for the last many years. But we were hoping that as the economy is doing well and we are continuing to grow at 7% 8% a year, the affordability factor which came into play from the time BS6 was introduced, that affordability factor will gradually go away. But it seems like it's going to take longer to go away because in the emission area and the safety area, new regulations are coming in and will come in in the next few years which will keep adding to cost of the smaller vehicles as well as of the bigger vehicles. The impact of this additional cost which is similar for all vehicles is much more on the smaller vehicles and therefore the revival of the sale and the affordability capabilities of people who otherwise buy small vehicles is going to be adversely affected and therefore we will not see this sector coming up as fast as I thought we would.

No, that of course has affected the profit after tax, the indexation issue. But if the market is growing only 3% and we are growing 3% and if we have had a situation where we had accumulated volume because we thought we'd be selling more cars then and therefore the all the promotion costs and the selling costs of cars have gone up there would be a hit on that. But to an extent we have remedied that situation. It will start only getting better in the third and the fourth quarter and in future we hope we will don't get into a situation where we produce more than what the dealers can sell. Instead of looking at the whole numbers of wholesale to the dealer to determine market share and sales and all that we will now in future only look at the retail sales and ignore the wholesale numbers. It's the retail sale which actually tell you what the condition of the market is and by doing that I think we will better align ourselves to what is the actual market situation and that should lead to some better cost results than what we are getting at present. So, I don't think that there is too much to worry about. Sure, we will not get the kind of result we would have got if growth was 10% or something. But then you can't have it all.

You obviously don't want to keep inventory levels too high. We'll be adjusting our production of different models in line with what the market situation is.

See, if a particular model has high sale, then we must produce more of those. On the other hand, if a model has more modest sale numbers, then there is no point producing high numbers of that model. It doesn't help anyone.

We have seen in the last few couple of years that some models are doing much better. For example, if today the Wagon R is doing very well among the smaller cars. But not all small cars are doing equally well like the Wagon R. We see that things like the Brezza or the Baleno does pretty good. But not all other cars in that area do equally well. So, we have to keep watching the market. Sometimes things change in the market also. A product may be doing well for 1 year or 1 and a half years and suddenly for some reason it falls off. So, there has to be a certain amount of agility also in dealing with these market changes.

I think we have corrected our market situation and the inventory level. At the end of October, the inventory level will be about 30 days. 30 days is what is prescribed as the correct inventory level. Of course, 30 days should be across all models. In our case, we still have some aberrations where I think some models are apparently going to be more than 30 days. They may be 40 or even 45 days. In those models, we will still have to make corrections.