Q1FY21 – Investor Conference Call

July 29, 2020

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Moderator: Ladies and gentlemen, good day and welcome to Maruti Suzuki India Limited Q1 FY’21
Earnings Conference Call. 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 presentation concludes. Should
you need assistance during the conference call, please signal an operator by pressing ‘*’ then ‘0’
on your touchtone phone. Please note that this conference is being recorded. I would now like
to hand the conference over to Mr. Nikhil Vyas. T hank you. And over to you, sir.

Nikhil Vyas: T hank you, Janis. Ladies and gentlemen, good afternoon once again. May I introduce you to the
management team from Maruti Suzuki, today we have us our CFO – Mr. Ajay Seth. From
Marketing & Sales, we have Member Executive Board -- Mr. R S Kalsi; Executive Director
(Marketing & Sales) -- Mr. Shashank Srivastava. From Corporate, we have Executive Director
-- Mr. Hideki T aguchi; and Executive Vice President (Corporate & Government Affairs) – Mr.
Rahul Bharti. From Finance, we have Executive Director – Mr. DD Goyal; Executive Vice
President -- Mr. Pradeep Garg; and Vice President -- Mr. Sanjay Mathur.

T he concall will begin with a brief Statement on the Performance and the Outlook of our
Business by Mr. Seth, after which we will 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 transcript will be available at our
website.

I would now like to invite our CFO – Mr. Seth. Over to you, sir.

Ajay Seth: T hank you, Nikhil. Good afternoon to everyone. Hope all of you and your families are keeping
in good health. Owing to an unprecedented global pandemic of COVID-19, it was a unique
quarter in the company’s history wherein a large part of the quarter had zero production and zero
sales in compliance with the lockdown stipulated by the government.

Production and sales started in a very small way in the month of May. T he company accords
utmost priority to the health, safety and wellbeing of all employees and associates across the
value chain and particularly its customers.

T he company has implemented stringent controls which are over and above the government ’s
stipulated guidelines to prevent the spread of COVID-19 besides continuous education is being
imparted to the workforce to absorb high degree of self-discipline. T hey are regularly being
reminded of not letting the guards down at any moment, whether at office or outside. T he
company has adopted work from home practice wherever possible.

T aking these measures as base, further measures specific to vendors and dealers have been
identified and implemented at their facilities to safeguard the employees. For ensuring the safety
of customers inside the showroom, the entire customer journey has been redesigned to ensure
minimal physical touch points and maximizing the use of digital interfaces to ensure contactless

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 operations. T he company is extensively using its flagship serv ices on wheels program to provide
vehicle repair services at customer’s doorsteps.

Sudden halt of business with start of lockdown put significant pressure on cash flow of some
business partners like suppliers and dealers. T he company provided them with cash flow support
to ensure that they are able to pay salaries to their employees and meet their obligations. T he
company is also facilitating the suppliers to get access to attractive financing schemes for
managing working capital.

After lifting of lockdown, fortunately, we saw some demand recovery. Accordingly, the
company focused on clearing the stocks at the dealerships and maximize the retail sales. T he
company has forged tie ups with banks and launched “Innovative Retail Financing Schemes.”
However, the biggest challenge is to ramp up production of vehicles amid shortage of manpower
and local lockdowns being observed in states or cities affecting the supply of components and
delivery of vehicles at dealerships. It is too early to judge whether demand is only pent up or it
has really started to recover.

Investors can also feel proud that your company was able to help in mass production of
ventilators, PPE and masks to the expectation of the Government of India despite zero prior
experience.

Coming to the highlights of Q1 for the Financial Year 2021, the financial results of the quarter
are not comparable with that of the same period previously and should therefore be seen in the
context of the ongoing COVID-19 pandemic lockdowns and restrictions required by government
for safety.

T he company sold a total of 76,599 vehicles during the quarter . Sales in the domestic market
stood at 67,027 units and exports were at 9,572 units. During the quarter the company registered
net sales of INR36,775 million. T he company made a net loss of INR2,494 million in the quarter.
It was partially offset by lower operating expenses and higher fair value gain on the invested
surplus.

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

Moderator: T hank you very much. Ladies and gentlemen, we will now begin the question-and-answer
session. T he first question is from the line of Kapil Singh from Nomura. Please go ahead.

Kapil Singh: Firstly, I wanted your views on demand outlook, if you could cover whether what kind of enquiry
levels are we seeing currently and how are the next few months looking like? I know you
mentioned that we cannot say whether current demand is pent up or not , but if you have done
any analysis on that, that would also be helpful.

Shashank Srivastava: T hank you for the question. If we see the parameters of consumer demand as reflected in
enquiries and bookings and retail, I would say it is around 85% to 90% of the pre-COVID time.

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 T his is as far as the consumer demand is concerned in the first three months that we have
operated in this year. As regards the future, I think that is much more a difficult question. And
obviously the steady state long-term demand depends on the fundamentals of economy. Because
the automobile sale is related to income level. Also, it is related to the sentiments because it is a
discretionary purchase. And I think going forward much will depend on how the COVID
situation evolves. So as I keep saying that you co uld see a vaccine upside or you could see a
virus downside. So we are keeping our fingers crossed about which way the COVID thing will
move. And I think it is so difficult therefore to make a clear guideline or clear prediction of what
the demand is going to be. However, having said that, the bounce back has reflected in the
consumer parameters I just mentioned, has been encouraging and we are looking forward with
a lot of optimism.

Kapil Singh: Secondly, just on financials to Mr. Seth, I know this quarter is not really comparable, but still
because we have to look at what we can see in terms of numbers. So if I look at raw material per
vehicle, it has been a sharp increase, up to 3,80,000 compared to 3,30,000 in the previousquarter.
Could you give some color here, what are the factors that have led to this and on a normalized
basis has there been any cost increase or it is more or less at the same level as previous quarter?

Ajay Seth: Raw material to net sales in the normal course would be about the same level. I think this quarter
was an exception for a couple of reasons , one is that the inventory levels went down significantly
whatever the stocks that we had from March to now, and therefore, there was a fixed costs
incidence hit that we take once in a while. So, this will get normalized which was I think over
110 crores. So that in a small base of sales value translates to over 3.5%. So that was one reason.
And second is that if you look at the discounts typically are amortized over the wholesale
numbers. Wholesale numbers are much lower than the retail numbers and therefore discounts on
the face of wholesale numbers looks much bigger. Discounts on an average this quarter were a
shade over Rs.25,000 whereas if you were to convert that into retail number, they would have
been much below Rs.20,000. So I think that was the other aberration we had. So, if you take
away these two exceptions, then material cost -to-sales ratio is pretty much the same as it was
sequentially Q4 to Q1.

Moderator: T hank you. T he next question is from the line of Yogesh Agarwal from HSBC. Please go ahead.

Yogesh Agarwal : Just a couple of questions. Shashank sir, you just mentioned, the bookings are back to 85%, 90%
and we know parts of India still lockdown and there is a financing issue as well. So, like-to-like
in areas where there is no lockdown and financing is easier in certain categories, is the demand
better off than last year in that sense?

Shashank Srivastava: Even in June, if you see there were in some states where actually there was a positive retail over
the previous year. So you are right there it is varying hugely across the states. T he states which
seem to have been affected currently most in the negative sense are Kerala, Maharashtra and
T amil Nadu.

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Yogesh Agarwal: And then related to that, as you said, pent up demand or not is tough to guess, but we are also
seeing a very tight second hand car market. So, does that mean that a large part of it is first time
buyers today which means they are incremental and when the market softens for second hand
market and obviously the replacement demand will come back as well, so it will all add up in
the coming months hopefully?

Shashank Srivastava: So you have to distinguish between two types -- One is the pre-owned car market and the
replacement buying because the replacement buying affects the supply of pre-owned cars
whereas on the demand side, there is a clear deflection that the demand for pre-owned cars has
increased. T he supply side, of course, is the issue at this time. So the problem is it is not selling,
it is about buying. And replacement buying is coming down because we believe consumers will
hold on to their vehicles a little longer than what they have been in the past before they upgrade
to a bigger or a better vehicle. So, I think you will see both, demand going up for pre-owned
cars, at the same time replacement buying coming down . And that is what we see right now in
the current demand scenario. As far as your question about the first time buyer is concerned, yes,
because the replacement buying will come down there will be an increase of course in some
additional car buying. We do expect that the reasons for buying the car purchase is its
functionality, would probably take precedence and that reflect in the increased first time buyer.
It sort of reflected in the current data of the last three months that we have.

Yogesh Agarwal: Ajay sir, just quickly on T oyota relationship, can you provide some update in terms of both
exports potential and then in India in terms of model transition?

Rahul Bharti: On exports, fortunately, a lot of countries are coming out of their lockdowns and we are looking
at this market also aggressively. T he government is also ambitious about exports. And at least
in the medium-term, we are quite ambitious about our exports. T o your other question in India
in terms of model transition, whenever we have any such new model plan, we will disclose it at
the right time. And at any point of time we always have new models in the pipeline. What I can
also mention to you that in exports the tie-up with T oyota we help, because we will get much
deeper market access, particularly in Africa.

Moderator: T hank you. T he next question is from the line of Pramod Kumar from Goldman Sachs. Please
go ahead.

Pramod Kumar: Sir, my first question pertains to the downtrading trend in the market. T here has been a strong
belief that the prices will revert and a lot of customers really looking at their purchase decision
and buy cheaper cars instead of what they wanted to buy. So based on the data you have for the
last few months, what are the draft trends emerging -- are we seeing more demand for Altos and
Wagon R or are you seeing massive variant level slippages from ZXI to LXI or VXI or
something like that, if you can share some color there?

Shashank Srivastava: So you are right. T he current data in terms of the enquiry levels does indicate that there is uptick
in the demand towards the smaller cars. T hat is I think also intuitive and has been also sort of
reflected in our consumer research. Having said that, we have to see the steady state what would

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 be the demand patterns likely to be because it is also true that in the past, we have seen when the
when consumers revert to the original state, the trend in the last few years have been towards the
SUV type of vehicle. So I will say both. At this moment, the data does suggest that in terms of
inquiries, the percentage of inquiries for the small cars seem to be higher than the previous years.
Just for information, it is around 65% against 55%, 56% which we traditionally had in the past.

Pramod Kumar: How much of this would be because the largest markets are virtually shut, they are not kind of
operating at that level because people are working from home, how much of this has become
that element? And would you see this ratio reverting to the normal levels once the largest cities
open up?

Shashank Srivastava: So I think it is a wider question because part of the reason for telescoping of demand downwards
is not necessarily the lock downs or the thing but also probably because the income levels
expectation for the future seems to be a little lower for the consumers, whether it is in terms of
their businesses or in terms of their salaries or in terms of employment , etc., As far as the number
of outlets are concerned, the number of outlets which keep opening and closing are pretty much
changing every day, because of the local lockdowns being enforced by various state
governments in different districts. So, at one point of time, we had almost 91%, 92% of our
outlets, which are about 3,080 outlets, of t hose 91% 92% were open, but it keeps varying, and
in fact, on weekends, there are some 10-states who have imposed weekend lockdown, so then
the number varies. If you are looking for a percentage of showrooms which are open, it is varying
between 81%, 82% to 91%.

Pramod Kumar: T he second question is for Ajay sir. As the old adage goes, “Never waste a good crisis” and we
are clearly in mid of a crisis. And given this what is the Maruti management doing in terms of
any big initiatives to lower its fixed cost intensity, because, if you look at the P&L of Maruti the
for the last five, six, seven years, we have seen massive surge in some of these cost centers like
marketing and advertisement and some of the other expenses which have become fairly fixed
and outrun the revenue growth in the last six, seven years, which has increased the breakeven
levels for the company. So are we doing something which is structural which could reduce the
fixed cost intensity of the business?

Ajay Seth: So, we are working on two parts -- one is that we are definitely working very hard on the fixed
costs. You have seen that this quarter we have worked hard in terms of reducing costs, some of
them are discretionary, which we have deliberately reduced and others are various areas where
we have worked very closely to see how we can bring the cost down . So the focus is to bring the
fixed costs down throughout the year. And there are targets that we have for all the verticals. We
are doing that in a very harmonized manner with all the concern ed verticals, this is one part. On
the other side, we are also working on the material cost side, where we are looking at more
rapidly localizing the imported components and second is how do you further bring the model
costs lower by having focus on the model cost down reduction programs that we run. So, I think
these are two areas we are working in a very focused manner and we do recognize and realize
that in a crisis or a situation we need to be very alert and be very careful about both variable as
well as fixed cost.

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Pramod Kumar: Finally, dealership franchise is one of the best in the industry by far, but looking on the P&L of
the company, if you can shed some color on the financial position of your dealers and suppliers
in the current environment, and what is Maruti doing to support them in this particular tough
time? And Shashank related to that is, would you expect a reasonable churn or shutdown of
competition dealerships, especially the smaller brands, because of what the dealerships are going
through, broadly the industry level if you can provide color on that?

Ajay Seth: See, we are keeping a very close watch on all our dealerships ever since the pandemic happened
and even before that . We have a concept of balance scorecard of a dealer where we keep
monitoring his performance on all parameters including his financials. And, in fact, we have also
provided help to dealers during this pandemic by releasing their advances in much earlier and
ensuring that they have adequate funds. We have also given them interest subsidy where they
are required. Further, we are working with banks to ensure that there is no stoppage of their
facilities both working capital as well as the inventory financing and on the retail side. I think
Shashank already mentioned that we are working with the banks under various schemes. So, I
think on the dealer side, we are at the moment pretty much okay . T here will be of course few
dealers who will have problems which I will ask Shashank san to mention, but overall the dealers
depending on largely through the workshop where the load now is coming back and I think the
revenue that they earn from there is pretty sizable because they are all large dealers and they
have reasonable share of business. We do not see such a problem with our dealers compared to
what it could be otherwise with other players of competition because we are talking of large
revenue coming, not from the sale of cars, but from the workshop and other parts of business
that they do which is T rue Value or insurance and financing, etc., But I will ask Shashank san
to supplement what I have just said.

Shashank Srivastava: I think I will add on to what Seth sir said. We have a very robust model for profitability for the
dealer. T hat has also reflected in the fact that if you see the last three years, according to the
FADA, there have been about 370 dealers were closed out of which Maruti had I think only 14.
So that is a very good sign as far as profitability of Maruti Suzuki dealers is concerned. And we
have a very robust system where it is not the sales revenue alone, but we have nine revenue
streams, some of which has been mentioned by Seth san, including the workshop, the body shop,
the insurance, the finance, the extended warranty, the accessories business and so on and so
forth. And as far as the support to the dealers in this thing, you are right, there would be stress,
especially cash flows, especially when there was no retails in April and half of May, Seth san
mentioned about the transfer of funds like accumulated reserve funds, etc., scheme payout , also
we had given some inventory support both for the vehicles as well as for accessories and also
for T rue Value cars. So, I think overall we have made sure that the dealer remains profitable and
going forward we will continuously keep track of this aspect which would surely arise when the
volumes come down. So, we are very confident that we will be successful in keeping the dea lers
strength especially the financial strength quite intact . T hank you.

Moderator: T hank you. T he next question is from the line of the next question from the line of Raghunandhan
from Emkay Global. Please go ahead.

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Raghunandhan : Firstly, for Q1 FY’21, how has been the industry shift towards petrol vehicles -- has it reached
85% level at which Maruti can sustain 50% overall market share despite being absent in diesel
vehicles?

Shashank Srivastava: While the official SIAM figures are not yet released, but we have a very good idea of what the
diesel ratios are. So for the industry, it is now about 20.6% in Q1, remember last year it was
29.5%. T here seems to be a downward shift . Maruti, of course, at zero percent because we do
not have diesel. And as far as competition is concerned, they are at 36%. So overall there has
been a reduction from 29.5% for last financial year to 20.6% in this quarter. I do not know the
calculation of that 18% or 16%, which you made for that 50% market share, but as far as retail
is concerned, the market share for Maruti in Q1 was slightly above 52%.

Raghunandhan : My second question was on RM cost . RM cost per unit was on higher side. Would Gujarat plant
depreciation also be one factor contributing to this increase?

Ajay Seth: Gujarat depreciation is part of the manufacturing and other costs. It is not combined with the
material costs. T he other fixed cost of the Gujarat plant will go to the material cost, but
depreciation is a lease expense, which get merged with the manufacturing and discretionary
expenses.

Moderator: T hank you. T he next question is from the line of Gunjan Prithyani from JP Morgan. Please go
ahead.

Gunjan Prithyani : I have two questions: Firstly, on the financing environment, if you could speak about it, is this
whole moratorium issue creating a problem for people to access financing? And also, I do notice
that you have done a lot of tie ups on the financing side. So, how has been the response or is that
clearly helping in terms of enable the financing?

Shashank Srivastava: So, as regards the financing, there are two parts to it . One part is relating to the inventory
financing which dealers offtake from Maruti Suzuki and the other part is of course the retail
financing. For retail financing, we have as you rightly pointed out, now collaborating with
various banks for different types of flexible schemes which consumers have been demanding
post this COVID. And flexibilities in terms of initial down-payment being low or such scheme
as a step up EMI payment scheme, where initially you pay less EMI s and later on when your
income levels are restored or you are feeling more confident, you have a higher EMI . We also
have schemes like the “Balloon Scheme”, where a large portion of the loan amount is actually
towards the last few EMIs. As regards the bank’s lending, the interest rates have come down in
response to the repo rates which have come down over the past few months, but not as much as
we would have thought they would. But nevertheless it is helping because although the banks
are relooking at the credit ratings of the consumers once again because probably of this COVID
situation. But, in terms of the penetration of the finance, there does not seem to be any difference
at the moment . We see the penetration somewhere between 78% to 80% which is normal
percentage of penetration across the last few years.

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Gunjan Prithyani: T he second question I had was on this subscription service foray that you made. If you can just
talk us through it, what is the thought process and how we are approaching it?

Shashank Srivastava: Again, the subscription process or the demand for subscription has been increasing in the last
few years. Of course, it is at a very low level at the moment, but post COVID we are expecting
when people are shunning shared mobility as also public transport and the demand for personal
transport increases, one of the very good options is subscription. And that is the thing which we
are doing a pilot in two areas -- one is Bangalore and the other one is in Gurgaon and Manesar.
So, there we have found some very good response. We started it just a few weeks back and I
think going forward we do hope that subscription will also become a pretty big business because
we are doing it on a digital platform along with one of our partners, and the way we have seen
the enquiries and the conversion now coming through I think it can be a significant game changer
going forward.

Gunjan Prithyani : T he inventory level you did mention has come off very meaningfully. Is there a number that you
can share?

Shashank Srivastava: I think the industry levels are at around 170,000 according to our information, you can give a
few hundred here and there. T he March inventory level for the industry was 250,000
approximately.

Gunjan Prithyani : For Maruti, if you could share?

Shashank Srivastava: For Maruti, it is roughly about 80,000 inventory at the end of June.

Moderator: T hank you. T he next question is from the line of Pramod Amte from CGS-CIMB. Please go
ahead.

Pramod Amte : T his is with regard to the diesel segment. Wanted to know if you have done some consumer
survey in terms of when the customer comes to look out for a deal with you and when he does
not find what his behavior is, does he completely shift over to the competition, what proportion
and how much you have been able to convert? And second, linked to the same, how do you look
to address this issue in the short to medium term?

Shashank Srivastava: Just a brief perspective, actually, if you look at the diesel fuel price compared with the liter of
gasoline, these prices have been converging dramatically actually. Remember, there were about
Rs.32 difference six, seven years back. Last year, it was about Rs.7.80 or something and now in
some states like Delhi, Goa, Gujarat, Jharkhand, Pondicherry, Odisha, the diesel and the petrol
prices are extremely close and therefore now it does not make economic sense to have a diesel
car if the criteria is running fast because the running cost is roughly similar about Rs.4/Kms for
both. And secondly, the initial price which you pay for a similar type of petrol vehicle is now
ranging between Rs.150,000 to Rs.200,000. So, with this large difference in acquisition c ost and
a very low difference or none at all in the running cost, there is no economic logic for a diesel
vehicle. And that is pretty clear from the diesel percentage which we have seen decrease

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 especially in the smaller car category where they have now decreased dramatically to less than
5%. Of course, there are some segments like the mid-SUV and above, where the people are still
looking for some amount of diesel, because there the preference seems to be based on torque
requirements rather than on economic requirements. And that is why we have said that Maruti
Suzuki is also looking as far as the larger diesels are concerned very closely to evaluate whether
it requires to be present in the larger diesel category.

Pramod Amte : And second one is, do you see any change in consumer profile as the economy is opening up in
terms of when you say compared to the earlier days, the demand record is almost 85%, 90%,
have you seen self-employed or corporates or who are the ones who are coming back in a bigger
figure in the customer profile?

Management: Yeah, I would just say that in terms of the profiling, maybe the salaried percentage has gone up
roughly from Maruti’s perspective because we have some detail data about our consumers. So
our data point suggest salaried customers going up almost 50% from the 45% they were earlier.
And the other categories like self-employed it is more or less similar. Business customers come
down a little bit, and government salaried customers which is part of that 49% that I was referring
to gone up slightly. So the average MHIs has, come down a little bit , but I think it is different
for Arena and for NEXA. T here, we do not see that it is statistically, significantly different.

Moderator: T hank you. T he next question is from the line of Jinesh Gandhi from Motilal Oswal Financial
Services. Please go ahead.

Jinesh Gandhi : You indicated retail were substantially higher in this quarter. So, as against domestic car sales
of 67,000, what would be the retail numbers?

Shashank Srivastava: T he retail is around 119,000.

Jinesh Gandhi: And secondly, on that beyond the breakup of salaried employees and that way, what will be the
share of first time buyers, given the expectation of the shift towards private transport ?

Shashank Srivastava: Share of first time buyers, as I said mentioned earlier, has gone up for us by a substantial 5.5
percentage points.

Jinesh Gandhi: And the second question is to Mr. Seth. Sir, we have seen substantial increase in realization
simply dividing net operating revenues divided by total wholesale, what would have led to this
– are we seeing substantial increase in spare sales or any non-vehicular revenues which is driving
this?

Ajay Seth: Not really, I think it is the mix impact , so a particular mix that you sell in a quarter, and this is
not really comparable this quarter because the size is so small that it depends on what cars have
been sold higher than what cars, so, it is not giving you a really meaningful ASP for this quarter.
I think it would be more relevant to see the full year.

Jinesh Gandhi: Can you share export revenues in this quarter?

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Ajay Seth: Export revenues are Rs.461 crores in this quarter.

Jinesh Gandhi: And lastly, if you can share the production side, how are we placed now in July current and what
are the plans for ramp up and any bottlenecks which you see?

Rahul Bharti : So, we are currently doing a run rate of about 4,000 plus per day. And currently, because of
increased incidence of the infection in Gujarat, we are only running Gujarat plant from a single
shift. Starting mid-August through September maybe first half, we plan to open the second shift
in Gujarat of course subject to a lot of enabling conditions like availability of manpower, like
the infection should remain checked. So if we add a second shift in Gujarat in September we
should be able to add about 900 per day more. And as of now, we are not limited by demand,
we are limited by supply. So our effort is to increase supply. We also have to be mindful that
there are a lot of local lockdowns across cities or states of different kinds being imposed all over
the country. So our vendors are located in about 46 -districts over nine states. And sometimes
they witness these lockdown. So our strategy is wherever the vendor is, at whichever point of
time he is, let him keep producing to the maximum and keep stocking, we never know when the
lockdown will hit him. So at least the stocks and the inventories will help during such lockdowns.
So that is the strategy that we are adopting, but it all depends on so many factors, particularly
the growth of the infection in the country and whether it remains in check.

Jinesh Gandhi: T his 4,000 per day is including Gujarat, right?

Rahul Bharti : 4,000 plus is total, Haryana plus Gujarat. And if we are successfully able to have a second shift
running in Gujarat, starting the second half of August through September first half, then we
should be able to add about 900 more.

Jinesh Gandhi: Any sense what was the production at Gujarat in 1Q or supplies from Gujarat in 1Q?

Rahul Bharti : First quarter is a highly misleading figure. It all depends from the start date. And it depends on
how many days we took to just establish protocols. So, even after the plant started, almost a
week to two weeks was spent in establishing the safety protocols and all the systems that had to
be in place, training of people. So, Q1 would not give a right picture. T he current rate from
Gujarat is about 900 plus per day.

Moderator: T hank you. T he next question is from the line of Amyn Pirani from CLSA. Please go ahead.

Amyn Pirani : My first question was actually on the financing tie-up. But just trying to understand, what is new
in these tie-ups, in the sense that I am sure that for a Maruti customer, most of the bigger financial
institutions would already be empaneled. So is there some kind of like a comfort or a subvention
or something else that Maruti is doing with these financiers, how does the tie up work for you
on a commercial basis?

Shashank Srivastava: T here is no subvention first of all. However, it is not correct to say that these schemes were
available in the normal course as well. So while the different banks might have been doing reta il
financing with us, does not necessarily mean that they were offering these flexible schemes

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 earlier and they were not , including, for example, flexibility in terms of down-payment or even
in terms of the percentage of the on-road price financing. So I t hink those are things which come
out because together with the bank, when we discuss with them, we make them realize that this
is the consumer requirement. And that market input or the consumer insight I think is very
essential when it comes to those good bank, who listen to the consumer requirement and tailor-
made their schemes accordingly. T hat is what you have observed in the last three months with
those special schemes that we have floated across many banks with our customers.

Amyn Pirani : You talked about the fact that discount per vehicle increased because of the mismatch in
wholesale and retail. But if we were to look at like-to-like model level discounts, would they
have come down in your opinion or they have remained stable, how would that be?

Shashank Srivastava: Of course, it depends, remember, from geography-to-geography, and it depends on model-to-
model, but generally speaking model-to-model it would have come down.

Moderator: T hank you. Next question is from the line of Rakesh Kumar from BNP Paribas. Please go ahead.

Rakesh Kumar: My first question is to Shashank. Last quarter, you have said that it is a little early to call out
trend. Now, with the advantage of some time behind us, can you share some of the broader
insights, your consumer research is suggesting, some of it you talked about around downtrading
and all, but beyond that, what are you observing, how the sales pattern in after-sales services
like spare parts, is that similar to how the vehicle sales is happening and which are the most
impacted segment of consumers or any other area which you have noticed is worth mentioning?

Shashank Srivastava: I think largely everything follows from those enquiries and bookings that we get for new car
sales. And when we have the retail, we do have the business for accessories, we also have the
service of the vehicles. Servicing of the vehicles of course has come back very strongly. T he
only difference between when the local lockdowns happen and many of the workshops get
closed, then it is a little different from sales because sales you can do a retailing, maybe the next
day, but in service, the capacity, once locked for that day gets lost. So, even if your customer
comes the next day, then obviously you have customers of the next day plus the customers of
the previous day. So, there seems to be a more effect there. However, it has been a strong bounce
back and I mentioned that . And on the first part of your question about the broad customer,
customer behavior will change. And of course, I mentioned about the down telescoping of
demand. And also the first time buyers getting increased, the functionality buying going up , we
have also seen people sort of gravitating towards the more established brands like Maruti Suzuki,
for example, because when the market becomes a little uncertain the consumers become less
experimentative. T hat is also something which we have observed. Of course, we also have
observed that while the replacement car buying has come down , the additional car buying is
going up as also the first time buyers and the reason there is people are preferring personal
transport and sort of avoiding public transport. So, those are the other trends which we have
witnessed. Apart from the general trend, of course, that is in line with the health consciousness
regarding the COVID, people are preferring to go t hrough the digital route for most of the
transactions.

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Rakesh Kumar: My next question is just an extension of that . So, based on the trends which you have noticed so
far, what would be your best estimate for the festival demand which is upcoming, not quantifying
directly, but would it be higher than last year similar or lower, essentially, how will you be
preparing your supply side, of course, keeping the unknown unknowns aside, how will you be
looking at the festival demands coming today?

Shashank Srivastava: So, as I mentioned, I think the first part of this discussion or question -answer session, going
forward a lot will depend on the COVID sentiment, we really do not know which way it would
move. So, suppose you say the vaccine is discovered tomorrow, fine, then the thinking becomes
totally different . Or if there is a second wave of virus, then the thinking becomes totally different.
And long term of course, it depends on the fundamental of the economy. Having said that, the
reason why festival demand always seems to be better is because car buying being a
discretionary purchase requiring positive sentiment , during the festival season, everybody seems
to be having a more proclivity towards expenditure. And that is what is spurt in demand in the
festival generally. So I am not sure, and I will still maintain that I will not take a position on that
bow much will it increase. But leave aside, if everything remains the common, of course, the
festival does bring in positive sentiment

Moderator: T hank you. We take the next question from the line of Binay Singh from Morgan Stanley. Please
go ahead.

Binay Singh: Just like you mentioned that in the near-term production is a problem. Do you think discounts
further trending down in July versus the level that you saw in June?

Shashank Srivastava: Yeah, I would say again, with the caveat that depends on geography and models. But generally
speaking, July discounts are lower than the Q1 discounts.

Binay Singh: And secondly, Maruti has sort of one new model a year launch timeline. So, a) are you remaining
committed to that ? And b) because of COVID, is there any change in product s strategy that you
are planning?

Shashank Srivastava: Actually, product plan in auto industry is actually made well in advance because there is a period
of incubation of three to four years before a new car is launched. So, those launch plans or the
development work does not get really change dramatically if there is a disruption in between for
a couple of months as we have seen. What does get disrupted probably some development work
which is possible to be made up in time later on. As regards the new car introduction, we are
launching the S-Cross with the K15 petrol engine which is extremely powerful and very smooth
and a sophisticated vehicle which we will be launching in the first week of August . Beyond that,
I will not be able to give you the specifics of our product plan for the future.

Binay Singh: And just last thing on the longer term on the product side, we have seen SUV as a percentage
rising. So would it be fair to assume that will be one of the key focus areas in your product
strategy over the next three years or so?

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Shashank Srivastava: As you know, we keep looking at opportunities and study different segments, the potential, that
is the reason why we are able to maintain our market share as we have done in the past
introducing some very successful models at times when people said, why would the Maruti
Suzuki bring this vehicle for example, Swift or Baleno or for that matter, the Brezza, the small
SUV or Ertiga, which was the first affordable MPV in India. So we will keep looking for those
opportunities. Yes, some of the opportunities and the trends which you are saying f or the SUV
does exist. We keep watching and at appropriate time, we will take suitable action.

Moderator: T hank you. We take the next question from the line of Sonal Gupta from UBS. Please go ahead.

Sonal Gupta: Could you give us a sense of like for FY’20 what was the share of industry demand coming from
top-10 cities and 11-to-20 cities?

Shashank Srivastava: Industry contribution in the top 10 cities for 2019-20 was 36%. 11th ranked to the 20th ranked
is 12.1%. From 21 to 40 cities 14.2% and for the rest of the cit ies is 37.6%.

Sonal Gupta: And related to that, given that these markets would have been more impacted by the shared
mobility, how do you see these markets sort of on a more normalized basis going forward, do
you see a big bounce back in demand from these markets?

Shashank Srivastava: Even last year when the market went down, there was a thought that it is because of shared
mobility, the opinion seems to be divided amongst the industry people whether shared mobility
was really the cause. But we think it was the cost of acquisition more than the shared mobility
thing. T he shared mobility percentage is still small. And going forward, I think post -COVID,
we would expect shared mobility actually to decrease dramatically as people shun public
transport and shared mobility in favor of personal mobility. So I think going forward, it would
have even probably a lesser effect in the short run. Long-term effect, yes, people do tend to revert
back to the older method. At that time, I think the debate will start again what will be the effect
of shared mobility on the auto demand.

Sonal Gupta: You also mentioned that we are seeing a shift towards a good trend in terms of use car market.
So could you give share some numbers around that , and what sort of increase have you seen in
used car prices, is there an increase in used car prices as well, any thoughts there?

Shashank Srivastava: One, I think it is too early to get to the trend; however, as I mentioned, on the demand side, there
seems to have been increase because we look at parameters like enquiries. Big cities have been
doing pretty well in the pre-owned car market in line with consumer research data is also with
the logic and intuition which we can sort of experience regarding demand towards the use car
market. However, as I said earlier, on the supply side, there seems to be an issue because people
are holding back to their older vehicles, which means that there are fewer vehicles to buy, to be
able to be refurbished and sold as pre-owned cars. So I think that is a supply side issue rather
than the demand side. Demand side as reflected in terms enquiry seems to be pretty strong. On
the other hand, the replacement buying has actually dropped, so for Maruti Suzuki, generally it
is around 25%, 26%, in the first quarter, it was about 16% to 17%.

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Sonal Gupta: How are we seeing this share of rural now and could you give us a sense of what is the profile
of customers on the rural side?

Shashank Srivastava: Rural markets as we said have been bouncing back a little bit more stronger for reasons because
the rabi crop has been pretty good with a record crop produce, kharif crop sowing has been also
very good; 20% more than last year, at the same time, the COVID sentiment is a little less
negative, because most of the hot spot areas are in the urban areas. So, yes, rural seems to have
done better. T here is no change really in the profile. T he profile difference between rural and
urban has remained such because I do not think the profile would change so suddenly especially
when we have only one quarter of data.

Moderator: T hank you. Next question is from the line of Ronak Sarda from Systematic Shares. Please go
ahead.

Ronak Sarda: Just continuing on the previous question on the top-10 cities, if I even look at maybe the metros,
we are seeing some easing out happening on the lockdown side, the net cases seem to be coming
off. But based on your discussion with customers here, do you see th e demand recovering
quickly or do you think the festive season would again be a bit uncertain just purely based on
customer interaction with the sales team, how do you see the demand from the metros in thenext
few months?

Shashank Srivastava: We do have some data points from June and July. So I think the previous question was relating
to the top-10 cities demand as a percentage of the total sales last year which is about 34%.
Actually in the first quarter, it was pretty less than that. In fact, in July, since the lockdown has
been lifted in many parts, I am seeing for the last one week or so that the demand seems to have
come back in the urban areas also. So, I think while in first quarter, the demand in the top cities
were less I am seeing, but in the last few weeks I have seen there is some upsurge in the demand
in the top-10 cities as well. So I think it is too early for us to take a position on how it will pan
out in the coming few days. But the response at this time seems to be encouraging for the areas
where the lockdown has been completely lifted.

Ronak Sarda: And a part two of this question is how do you see competitive intensity right now, I mean, how
do you think that will shape up given this has been a huge disruption , also, do you see what kind
of implications would have this on t he overall competitive scenario? And in July retail sales,
would you say it is around 85%, 90% of last year the current trend?

Shashank Srivastava: I am not able to give you the forward-looking projections for July, but trend seems to be good
at the moment , you will get those numbers in a few days time I am sure, 1st August, we will
release the numbers for the month of July. But when you are talking of the competition,
obviously, they are strong, we are fighting in all segments as always, we keep trying to maint ain
our market share.

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Ronak Sarda: Last question for Ajay sir. So other expenses if we see for this quarter, does this have any
exceptional item here or this is something which was the discretionary which have been cut or
do you see there is some one-offs still there in Q1 numbers as well?

Ajay Seth: T here is no exceptional item except for the fact that we have contained costs this quarter based
on much lower production. So a lot of cuts across all verticals have happened this quarter as
discretionary expenses have been cut . And if the production goes up, we will see if we need to
incur some of the advertisement and marketing expenses later on, but this will all depend on
how it pans out in the next few quarters. So, there is no exception al item the only exceptional
item, as I mentioned earlier, was in the material cost where we had this fixed cost incidence of
about Rs.110 crores or so, which was because of the lowering of inventories which over the year
will get normalized.

Moderator: T hank you. Well, that was the last question. On behalf of Maruti Suzuki India Limited, that
concludes this conference. T hank you for joining. You may now disconnect your lines.

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