Full Year 2021 Maruti Suzuki India Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kumar Rakesh - BNP Paribas, Research Division - Analyst : My first question was for Ajay san. So on the margin front itself, so how much of commodity sequentially you said you have already come through? And more importantly, what is -- what appears so far is that our price increases have been trailing the commodity inflation, which we are seeing. And in the next quarter, we'll also have the ramp-up impact of the new plant in Gujarat. So would it be fair to expect that this decline in margin will likely continue at least for a quarter or 2? Ajay Seth - Maruti Suzuki India Limited - CFO & Member of Exec. Board (Finance, Corp. Planning, Co. Secretarial, Legal and Internal Audit) It all depends on what the volume offtake is, because if situation continues like this and deteriorates, then, of course, there will be a definitely an issue of operating leverage, including the new plant that's going to come in. But the kind of hit rate that we were having in the fourth quarter, we are hopeful that we will be at least doing this. And we're actually running short of demand as we had very low inventories at the end of the year. So hopefully, I think if things don't deteriorate from here and they start improving thereafter, we may see things cooking up and operating leverage being much better. But if they don't, then, of course, there is this concern of the outlook. But it will also depend on one more factor that how much more headwind do we have on commodities. Because the onslaught has still not stopped. We are also seeing some rise in prices even in the first quarter. So if at some point of time, they stop, I think then you will start seeing that reversal. So it's difficult to predict at this time what will be the outlook. But margins can be volatile, at least in the first quarter and the second -- in the first half of this year.