Maruti Suzuki India : Transcript of the investor conference call - Q2, FY 2022-23.

Q2 FY'23 - Investor Conference Call

October 28, 2022

1 | P a g e

MSIL Conference Call Transcript 28th October 2022

th

Moderator:	Ladies and gentlemen, good day, and welcome to the Q2 FY '23 Earnings Conference Call of
	Maruti Suzuki India Limited. As a reminder, all participant lines will be in the listen only mode,
	and there will be an opportunity for you to ask questions after the CFO commentary concludes.
	Should you need assistance during the conference call, please signal an operator by pressing
	"*"then "0" on your touch tone phone. Please note that this conference is being recorded.
	I now hand the conference over to Mr. Pranav Ambaprasad. Thank you, and over to you.
Pranav Ambaprasad:	Thank you, Yashashri. Ladies and gentlemen, good afternoon once again. May I introduce you
	to the management team from Maruti Suzuki. Today, we have with us our CFO - Mr. Ajay Seth.
	From Corporate, we have Executive Director, Corporate Planning and Government Affairs -
	Mr. Rahul Bharti; General Manager, Corporate Strategy and Investor Relations - Mr. Nikhil
	Vyas. From Finance, we have Executive Director - Mr. Pradeep Garg; and Vice President - Mr.
	Dinesh Gandhi.
	The con call will begin with a brief statement on the performance and outlook of our business
	by Mr. Seth, after which we'll be happy to receive your questions.
	May I remind you of the safe harbor. We may be making some forward-looking statements that
	have to be understood in conjunction with the uncertainty and the risks that the company faces.
	I also like to inform you that the call is being recorded, and the audio recording and the transcript
	will be available at our website. May please note that in case of any inadvertent error during this
	live audio call, the transcript will be provided with the corrected information.
	I would now like to invite our CFO, Mr. Seth. Over to you, sir.
Ajay Seth:	Thanks Pranav, Good afternoon Ladies and Gentlemen, I hope you and your families are healthy
	and safe. Let me start with some business highlights during the quarter.
	Maruti Suzuki celebrated '40 years of Suzuki's partnership with the people of India'.
	During the event, Hon'ble Prime Minister laid foundation stone of Suzuki Motor Gujarat electric
	vehicle battery manufacturing facility at Hansalpur, Gujarat and Maruti Suzuki vehicle
	manufacturing facility in Kharkhoda, Haryana.
	The Company was incorporated to provide cars for the masses of India and also build a vibrant
	manufacturing Industry in India. We are happy to share that the Company has been true to its
	reason for existence even today.
	If we look back, one of the key success factors in our journey has been the strong focus on
	understanding and fulfilling the needs of customers by offering them relevant products,
	technologies, and services. Over the years, customers have evolved and accordingly our
	products, services, and business processes too have aligned, keeping the customers at the heart
	of it.

2 | P a g e

MSIL Conference Call Transcript 28th October 2022

The other factor has been how we have always thought of the long-term in all our actions. All management decisions are based on the long-term interests of our stakeholders.

Last but not the least, we have a very good blend of Indian and Japanese culture in our Company. We were able to combine Japanese shop-floor practices and discipline with Indian innovation and zeal in our operations. Our parent Suzuki, Japan, has been a silent support, trying to look at the future from its global experience and carefully selecting the best technology and products for Indian customers.

Coming to the recent new model launches,

• In September, the Company started retailing its newest flagship offering from NEXA, the Grand Vitara. With over 75,000 bookings in a short span of time, customer response for Grand Vitara is overwhelming. The Grand Vitara is a multi-product offering with cutting-edge Intelligent Electric Hybrid powertrain, Progressive Smart Hybrid technology and Suzuki ALLGRIP SELECT technology is designed to appeal to a varied customer base and will revolutionize the SUV space in India.
• In August, the Company launched a full model change of its iconic brand Alto. The All-New Alto K10 is loaded with host of comfort, safety, convenience and connectivity features.
• The Company further strengthened its green vehicles' portfolio by introducing S-CNG powertrain technology in Swift and S-Presso. With this, Maruti Suzuki now offers 10 vehicles with factory-fittedS-CNG technology. Maruti Suzuki's Research &
  Development facility conducts rigorous testing for its factory-fittedS-CNG cars to deliver unmatched safety, performance, durability and fuel efficiency.

Going forward, the Company will stive to further strengthen its SUV portfolio to dominate the SUV segment, just like all other segments.

Coming to the business environment during the quarter,

On the back of better availability of electronic components, the Company reported its highest ever sales volume in any quarter. The electronics component shortages are still limiting our production volumes. In this quarter, the Company could not produce 35,000 vehicles. Limited visibility on availability of electronics components is a challenge in planning our production. Our Supply Chain, Engineering, production and sales teams are working towards maximizing the production volume from available semi-conductors. The supply situation of electronic components continues to remain unpredictable.

Coming to the Highlights of Q2 (July-September), FY 2022-23

The Company sold a total of 517,395 vehicles during the quarter. Sales in the domestic market stood at 454,200 units. Exports were at 63,195 units. The same period previous year was marked

3 | P a g e

MSIL Conference Call Transcript 28th October 2022

by acute shortage of electronic components and consequently the Company could sell a total of 379,541 units comprising 320,133 units in domestic and 59,408 units in export markets.

Pending customer orders stood at about 412,000 vehicles at the end of this quarter out of which about 130,000 vehicle pre-bookings are for recently launched models.

During the quarter, the Company registered its highest-ever quarterly Net Sales of INR 285,435 million. During the same period previous year, the Net Sales were at INR 192,978 million.

The Operating Profit in quarter 2 FY2022-23 stood at INR 20,463 million as against INR 988 million in quarter 2 FY2021-22. The Operating Profit in Q2 of last year had dipped sharply owing to steep commodity price increases and electronic component supply constraints and hence results of Q2 FY2022-23 are not strictly comparable with those of Q2 FY2021-22. The Company has been making simultaneous efforts in securing electronic components availability, cost reduction and improving realization from the market to better its margins.

With this, the Net Profit for the quarter rose to INR 20,615 million from INR 4,753 million in Q2 FY2021-22.

Coming to the Highlights of H1 (April-September), FY 2022-23

The Company sold a total of 985,326 units during the period. Sales in the domestic market stood at 852,694 units. Exports in this half year were at 132,632 units. During the same period previous year which is H1 FY2021-22, the Company registered a total sale of 733,155 units including 628,228 units in domestic market and 104,927 units in the export market. In addition to electronic components shortage, the sales in H1 FY2021-22 were also severely affected due to COVID related disruptions and hence results of H1 FY2022-23 cannot be compared with those of H1 FY2021-22.

The Company registered Net Sales of INR 538,298 million in H1 FY2022-23, which is the highest-everhalf-yearly Net Sales. The Net Sales in H1 FY2021-22 were at INR 360,965 million.

The Company made a Net Profit of INR 30,743 million in the H1 FY2022-23 as against INR 9,161 million in H1 FY2021-22.

We are now ready to take your questions, feedback and any other observations that you may have. Thank you.

Moderator:Thank you very much. We will now begin the question and answer session. We have the first question from the line of Kumar Rakesh from BNP Paribas. Please go ahead.

Kumar Rakesh:My first question was around realization. So, sequentially, we have seen an increase in the realization by about 2%. Now, this is quite noteworthy given that in the context of the volume mix which we had during the quarter, mini and compact segments mix had increased while UVs

4 | P a g e

MSIL Conference Call Transcript 28th October 2022

	and export mix or the volume mix was lower. And also discounting in September quarter usually
	is higher than what happens in the June quarter. So, despite all of this, we have seen an increase
	in realization. So, can you please help us understand that what led to this realization increase?
Ajay Seth:	Sequentially, there is an improvement in realization and this is attributed to again the mix
	because while we had lauched the new Alto, the price point of the old Alto and new Alto were
	different. So, that's one part. Second also, I think the proportion of the Brezza and other high-
	end vehicles were higher compared to the first quarter, which led to this higher realization. Also
	the fact that we had taken a price increase in the first quarter, which was partial in first quarter
	and fully absorbed in the second quarter. So, that also had its impact. Discounts are more or less
	same in the 2 quarters. It's marginally higher in this quarter compared to first quarter, not very
	different.
Kumar Rakesh:	My second question was how to look at now at the installed capacity that we have access to at
	Maruti given that we'll also have access to Toyota's capacity, so what number we should be
	looking at the installed capacity for us?
Rahul Bharti:	So, as of now, we have about 22.5 lakh capacity at Haryana plus Gujarat. Of course, production
	at Karnataka is over and above this. And in times to come, we are in process of working on the
	Kharkhoda plant, which will be up and running in the year 2025. And if required, I think most
	likely we might have to add about 1 lakh capacity on a short term basis in Manesar to meet
	intermediate demand. Manesar 1 lakh might come by April '24 and Kharkhoda in the subsequent
	year.
Moderator:	We have our next question from the line of Pramod Kumar from UBS. Please go ahead.
Pramod Kumar:	And just on the opening comments, you talked about future SUV launches to dominate the
	segment, like how you dominate the other categories, which is quite heartening because your
	current SUV market share, SUV plus MPV market share is 17 percentage points. So, if you can
	just help us understand between you or Rahul san as to what are the plans here because the
	understanding is that it's a pretty competitive segment with very well entrenched models and
	Maruti is kind of coming late in the category. You're talking about dominance, but even if it's
	significant market share what are plans and how do you get there, sir?
Ajay Seth:	So, Pramod, I think let the excitement carry on some more time because we have said that we
	are commited to address this SUV segment. And therefore, we have mentioned that there will
	be more launches in these segments. But as you're aware that we don't give any details of the
	products, product plans and as such, there should be some excitement which will be visible to
	you as you saw in Grand Vitara, maybe soon you will see more excitement in the newer launches
	that we will have. But definitely, we are committed to the SUV segment, which will not only
	help us address the growing segment but also help us address the market share loss that we've
	had in the past.

5 | P a g e

MSIL Conference Call Transcript 28th October 2022