Finance Ministry is set to approve 7th Pay Commission in the third week of June, for all central government employees and officials. As of now, the minimum basic salary of central government employees ranges from INR 18,000 to INR 25,000. This means once the new pay commission is into effect, it could spell a boom in expenditure from this segment.
One of the many reasons why Maruti Suzuki is India’s No 1 carmaker is being ahead of rivals in marketing as well as planning. Maruti Suzuki India has already created a database of 1.7 crore government employees who are set to benefit by the pay commission.
The list comprises of both central and state government employees and pensioners. The company expects a minimum of 18 percent of sales to come from this category of buyers over the next few years. In the last fiscal, 16 percent of company sales were from buyers in this segment.
The optimism in seeking outstanding results with the introduction of 7th Pay Commission comes from MSIL’s experience when 6th Pay Commission was announced. Sales of passenger vehicles increased 19 percent in 2009-10 and went up to 28 percent in 2010-11. This time round, however, no arrears are to be paid but yet MSIL pins hope on seeing outstanding sales.
MSIL has had to face a dip in net profit which fell 11.73 percent in January-March quarter. Uncertainties in the economy, drought situation in the country, the lower purchasing power of rural buyers and vague policy concerns have affected the auto sector in a bad way.
However, with the economy showing signs of improvement and with good rains being forecasted, Maruti Suzuki expects to receive double-digit growth this fiscal while announcement of 7th Pay Commission has also added to company expectations for better days ahead.
via ET Auto