With an eye on gaining market share, the carmaker invested close to $500 million or Rs 3,589 crore during FY20. The investment is part of Rs 7,000 crore investment committed by the company to the Tamil Nadu government in 2019.
The maker of Creta and Venue outperformed the overall Indian market led by its SUVs – gaining market share by 130 basis points at a time, when the Indian market posted its worst yearly decline in a decade. Hyundai Motor India closed FY-20 with a market share of 17.5%.
According to the financial data sourced from Veratech Intelligence, the company registered a 9% drop in net profit for FY20 at Rs 2,390.60 crore. The profit was pulled down by higher marketing costs incurred for the launch of five new models and transition of product portfolio from BS IV to BS VI.
Reviewing the FY-20 annual performance, the director’s report in the company’s official filing stated, “To ensure long-term competitiveness, your company is taking several steps including launch of new products, quality improvement, cost competitive measures and enhancement of customer experience that will help profitability in the long term.”
While the operating margin slipped to about 10%, the intent of the company to be a preferred choice for upgraders in India has worked.
To be sure, the average price point for Hyundai Motor India has moved up from 5.5 lakh to 8 lakh and this is clearly seen in the operating margin of the company. Over the last three to four years, the company has seen its EBIDTA move into double digits from 6-7% prior to FY16.
At a time when industry’s plant capacity utilisation severely fell to 50-60%, Hyundai Motor India’s plants operated beyond 90-95% even in a difficult year. The total production of your company for the year was at 6.47 lakh units as against 7.1 lakh units in the previous year with a decrease of 8.96%.
The rise in exports volumes by 4.8% in FY-20 to 1.62 lakh units partially cushioned a dip in the domestic market.
The company stated that it successfully managed the transition from BS IV to BS VI vehicle technology and by February it started selling BSVI cars, this ensured that neither the company nor its dealers suffered with unsold BS IV stocks.
During FY20, the company launched five new products to stay ahead of the rivals and this was further accelerated in FY21 with the all new Creta, Verna, i20 amongst others.
“All our BSIV stocks completed by March 2020, to overcome the pandemic your company has taken various measures such as ‘Dealer Support Packages’ and ‘Customer Support packages’ to retain our sales which have been described in detail elsewhere in this report,” added the report.
Even as the overall market has remained in the negative zone, the company has prepared the groundwork for expanding the capacity further.
The company took steps to increase the capacity to 7.5 lakh units p.a. by way of automating certain processes, removing the bottlenecks in the production process and introduction of new models in FY-20 and eventually this would increase to 8 lakh units per annum.
Through a series of cost cutting measures, the carmaker was able to save Rs 90 crore in costs in FY20.