The ongoing consumption slowdown has taken a toll on auto sales for government-run canteen stores department (CSD).
According to people familiar with the matter, the CSD saw a 50 percent drop in auto sales over the last 3-4 months as a result of the pan-India slowdown. The slowdown resulted in autos revenue falling to Rs 350 crore from Rs 700 crore per month for the CSD, said the people on condition of anonymity.
The government-run canteen stores department, the single largest client for India's consumer goods companies, is also one of the largest dealers of automobiles in India.
In a recent conference call, Maruti Suzuki said that the share of sales to government employees stood at around 20 percent, implying a significant volume is sold via the CSD route. The top-selling carmakers in the mid-sized segment include Maruti, Hyundai, Honda and Mahindra & Mahindra.
As per sources, the CSD could clock about Rs 4,000 crore revenue in auto sales in FY20, much lower than it generated in the last two years. Demand over the last two years was primarily driven by the benefits of uniform pricing following the GST rollout as well as the 7th pay commission. At the end of FY19, the CSD clocked approximately Rs 18,000 crore in sales, with around 35-40 percent coming via the auto sales route.
The CSD currently owns more than 34 depots across India and sells about 5000 SKUs of goods. In response to CNBC-TV18's query, the CSD said that it has "adequate funds to meet the requirements of beneficiaries as in the past."
First Published: IST