Mahindra & Mahindra shares dip; estimates Q1FY22 sales volume lower by 15-20%

Automobile major Mahindra & Mahindra Ltd said its sales volume for the quarter ended June 2021 is estimated to be lower by 15-20 percent as compared to the year-ago period due to the second wave of the coronavirus pandemic.

The revenue and profitability will also be impacted in line with the fall in volumes. However, the company is taking various cost optimisation measures to limit the adverse impact, M&M said.

“The rampant spread of the second wave of COVID-19 and lockdowns enforced in various states/parts of the country coupled with disruption in the supply of oxygen for industrial use, demand and supply for vehicles and tractors is expected to be impacted temporarily,” M&M said in a regulatory filing on Tuesday.

Further, on the supply side, global shortage of micro-processors (semi-conductors) used in electronic control units (ECUs) fitted in different components/aggregates for vehicles continues to pose challenges to the smooth production schedules, it said.

In view of this, M&M said it is carefully reviewing the demand and supply situation and re-calibrating its operations accordingly while protecting the interest of its customers, dealers and suppliers.

“The endeavor is to ensure optimal level of inventory at plants and dealerships in order to be prepared for a rebound in demand once the situation returns to normalcy,” it added.

Earlier this month, the company had decided to prepone the annual maintenance plant shutdown of its automotive division to May in the wake of the second wave of the coronavirus pandemic across the country. The maintenance of four working days was originally scheduled for June 2021.

M&M said it would advance the scheduled “maintenance of four working days, in each of its automotive division manufacturing plants, to the month of May 2021, in a staggered manner”.

At 10:10 am, the shares of Mahindra & Mahindra were trading 1.42 percent lower at Rs 764.60 apiece on the BSE.