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    M&M to invest Rs 3,000 cr in EV market over next 2-3 years; expects chip shortage issue to resolve soon

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    M&M to invest Rs 3,000 cr in EV market over next 2-3 years; expects chip shortage issue to resolve soon

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    Semiconductor shortage issue will take a few quarters to resolve completely, said Manoj Bhat, CFO at Mahindra and Mahindra (M&M), in an interview with CNBC-TV18. Bhat also mentioned that the company is planning to invest around Rs 3,000 crore in the electric vehicle (EV) market over the next 2-3 years.

    Semiconductor shortage issue will take a few quarters to resolve completely, said Manoj Bhat, CFO at Mahindra and Mahindra (M&M), in an interview with CNBC-TV18.
    He expects to see some degree of normalcy on the semiconductor shortage issue front in the next couple of quarters.
    “The situation has improved a lot. The near-term outlook looks better. And from our perspective, it will take a few quarters to resolve completely. My suspicion is that in the next couple of quarters, we should see some degree of normalcy, but it's clearly something we are closely watching. But in the short term, definitely a better situation from where we were two months back,” Bhat explained.
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    Mahindra & Mahindra Ltd (M&M) reported numbers better than expected for the second quarter. The auto major, on November 9, reported revenue of Rs 13,305 crore for the July-September period, up 14.8 percent on a year-on-year (YoY) basis. The company posted a net profit of Rs 1,929 crore for the quarter ended September, up more than three times on a year-on-year basis.
    The company reported slightly better margins compared to its peers.
    “As the situation improves, which we believe it will on the semiconductor side, and as volumes go up, we should see some possibilities to improve margins on both fronts, including potential price hikes if we need to take any,” Bhat said.
    From an electric vehicle (EV) perspective, there is a longer-term pipeline which the company has articulated, which is mainly centered around focusing on EVs.
    “We do believe that 20 percent of the share of market will move to EVs latest by 2027 and possibly even earlier,” he stated.
    The company’s predominant focus today is on three-wheelers and the last mile mobility markets which are very amenable to modifying themselves to more electrification.
    “There's a lot of investments we are doing on this side and we have already articulated that this could be Rs 3,000 crore of investments over the next two and a half years or so in the EV market and that's something we are regularly pursuing,” he mentioned.
    M&M is taking a very calibrated approach in increasing prices, Bhat mentioned.
    “Over a period of time, we have already taken three price hikes on the farm side and about two to three on the auto side. The demand picture is very strong. We want to wait and watch in terms of the commodity prices and then take an appropriate call and that is why we are taking a more calibrated approach on that,” he said.
    On tractor business, he said, “Last year was a very strong year for tractors and in that market, we are still expecting low single digit growth overall. Secondly, within that, we expect market share increase for us. And the third point - because of erratic monsoons and the impact on harvesting, we are seeing some demand fluctuation in the short term. But clearly, that demand is not going to go away. So it will probably come through in the second half of the year. So, from our perspective, I think demand side looks okay.”
    For the full interview, watch the accompanying video.
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