Maruti Suzuki expects 6% growth in FY'13

Rules out price hike, says cost of owning a car is going up largely because of fuel prices

Ruling out price hike in the near term, country's largest car maker Maruti Suzuki today said it is expecting sales growth of about 6% in the current financial year ending next moth.

"We think that this (fiscal) year Maruti will grow by about 5.5 to 6%," Maruti Suzuki Ltd Chairman R C Bhargava said on the sidelines of India-UK CEO Forum here.

On whether there will be price hike in the coming months, he said: "I don't see price hike taking place."

The cost of owning a car is going up largely because of fuel prices, he said.

Last month, Maruti Suzuki India increased the prices of its vehicles across models by up to Rs 20,000 to offset the pressures of adverse currency fluctuation.

The company sells a variety of models, starting from M800 to imported Kizashi at a price range starting from Rs 209,000 and going up to Rs 17.52 lakh, (ex-showroom, Delhi).

Asked about growth prospects for the next fiscal, Bhargava said: "This year continues to be difficult for the sector. Next year, probably, the growth will be flat."

Since October, car loans rates of private banks have actually fallen by 2% and lowering of interest rates by 2% has not led to higher sales, he added.

Growth rate will not improve very much unless the Budget does something for better investment sentiment, he said.

On Budget expectations, Bhargava said: "We are not in favour of sops but complete measures like GST (Goods and Services Tax) that will create a lot of good sentiments... We don't really get growth from sops because it will temporarily boost sales. But it cannot give long term industrial growth."

He also said the growth will also depend on the election result of 2014.

"...Because if you have a coalition government and driven by the same kind of coalition 'dharma' which the PM has mentioned then you will have difficult time again," he said.

On the labour trouble issues facing the sector, Bhargava said, "If the economy and demand continues to be stagnant and industry finds it difficult to meet, it could give rise to more labour troubles. But if the economy picks up again, people will start getting jobs."

When asked about the outlook for next 6-8 months in the light of brewing tension at Hero plant, he said: "I think once wage settlement is done in Hero...And once that will be done, there will be peace for sometime. We have had the wage settlement, Honda have had wage settlement."

On whether he expects excise duty increase in case of
diesel price hike in the Budget, Bhargava said that as the subsidy on this fuel is going to go away in the next few months, there is no point in raising the duty.

He also said the company is assessing the market in light of diesel price deregulation.

"We are taking a judgement on what will be share of diesel and petrol vehicles. We are taking a judgement on what will be the relative demand of petrol cars. If the policy of the government continues for diesel prices to go up to the market level we are fine," Bhargava said.

Talking about the forum meeting, he said Europe is virtually on recession, but Europe and the UK are looking for plans to do more business.

"Delegation is looking for more opportunity, but how much it will fructify... It takes time because you have to discuss to have to do due diligence," he said.