The first step is to get production started on a sustainable basis: R.C. Bhargava

R.C. Bhargava, Chairman, Maruti Suzuki, fields questions on assisting with healthcare equipment, their plans for the EV market, and how the auto industry can bounce back

May 05, 2020 SINDHU BHATTACHARYA No Comments Like

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The last few weeks have been unprecedented and unpredictable, as the country went into a sudden and complete lockdown to flatten the COVID-19 curve and all economic activities came to a halt from March 25, 2020. Naturally, production of vehicles was also stopped and the facilities of India's largest car maker, Maruti Suzuki India, fell silent. Now, as the lockdown has been eased and factories are again allowed to resume production, the big question is how to revive demand in a market where incomes are affected and the production-supply-sales ecosystem jammed. R C Bhargava, Chairman, Maruti Suzuki, gives us an insight into how things stand during these challenging times. 

Excerpts from the interview…

TOS: COVID-19 presented an unprecedented challenge to businesses in India and Maruti has come forward to make healthcare equipment. How did this come about? What healthcare equipment is being manufactured, where, and what are the associated volumes?

RCB: MSIL is assisting AgVa Healthcare, a start-up company, to scale up production rapidly. While AgVa remains responsible for the technology, design and performance, MSIL (Maruti Suzuki India Ltd) is helping in all other areas including component development, manpower, space, finances, and so on. A production rate of 400 ventilators a day has been reached. A JV (joint venture) of MSIL is making masks (surgical) and will shortly make N-95 masks. The masks are SITRA approved and production rate is 50,000 per day. PPE garment manufacturing is also expected to start shortly.

TOS: What investments has Maruti made in manufacturing such equipment? What will the company's contribution to overall PPE, ventilator, mask volumes in the country be, over the next three-four months? 

RCB: MSIL has not made investments in these items. The help it is giving is in terms of its people and their experience of volume production.

TOS: By when will Maruti commence production of vehicles at its facilities? How much capacity utilisation has been planned initially and what is this planning based on? How and by when do you think production will be scaled up to pre-COVID-19 levels?

RCB: MSIL is working on this but a date of starting production cannot be indicated as yet. The future volumes will depend on several factors and cannot be predicted now.

TOSWhat are your projections for sales for Q1 of FY21 for the company and for the industry? By when will the Indian passenger vehicle industry revert to pre-COVID-19 sales?

RCB: Not possible to indicate.

TOSGoing forward, what are Maruti's plans for the EV market? Do you see the market for EVs reaching any reasonable volume this fiscal?

RCB: There has been no change in MSIL’s plans. We do not see any volume sales of electric cars this fiscal.

TOSWhy has Maruti deferred the launch of the electric car for personal use? Your views on why this step became necessary, what kind of government support is essential for the EV industry to prosper in India and by when would the ecosystem be ready?

RCB: EVs can only be offered for sale when customers are ready to buy them. That condition does not exist at present.

TOSWill the COVID-19 disruption and consequent pain in the economy push Indian car consumers back towards small cars? What have the small car sales trends been in the last few years, and if these cars come back in favour again, how will Maruti benefit from this trend?

RCB: This is a hypothetical question. Let us see how customers behave after sales start.

TOSThere were reports earlier of some well-known Chinese car makers coming to India. The COVID-19 disruption may have stymied their plans, but these companies were betting big on SUVs. Your take on the impending Chinese arrival in the car market and how this may change contours in the future.

RCB: No comments at this stage.

TOSWhat, in your opinion, should the government do to help the automobile sector bounce back? And what sort of help would the component industry need, specifically those companies which are in the MSME or micro category?

RCB: The first step is to get production started on a sustainable basis. For this the supply chain has to work fully so that 100% components can be available all the time. The retail sales system should also be able to sell the cars that are produced. There is a need to look at measures to increase car affordability and demand. The component industry may need help in the form of working capital.

TOSAlso, what is the need of the hour for automobile exporters? What is expected of the government to boost exports? 

RCB: Export of automobiles depend on the state of the markets in the buying countries, besides events in India. We need to see how this demand develops in the wake of the COVID-19 crisis everywhere.

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