No early signal of chip supply disruption from Taiwan, says M&M
Premium- Tensions arising from China's offensive on Taiwan, the world's largest contract manufacturer of semi-conductor chips, are not an immediate threat, M&M said
NEW DELHI: Homegrown auto and farm equipment giant Mahindra & Mahindra on Friday reported a 67% year-on-year (YoY) surge in its June quarter net profit to ₹1,430 crore.
M&M, like its domestic peers, is looking to significantly ramp-up production to cater to growing demand for passenger vehicles, however, the company said it was not the semi-conductor crisis impeding a rise in demand, but the process of capacity addition which involves lengthy lead times.
“We've got all our investments going to add capacity but there are lead times to get things up and running," said Rajesh Jejurikar, executive director, automotive and farm equipment sector, M&M.
Jejurikar emphasised that the worst of the setbacks the company received on chip supply is behind them. Tensions arising from China's offensive on Taiwan, the world's largest contract manufacturer of semi-conductor chips, are not an immediate threat, M&M said.
“We have no early signals that we'll have a disruption coming from Taiwan, but we will have to wait and watch," Jejurikar added.
“A lot of the chips for the auto sector come from various other places as well. Malaysia has a large plant from where we get a lot of our supplies, and there are other countries with semi-conductor factories too So we don't have a very high dependence on Taiwain from a single-source standpoint," said Anish Shah, managing director and CEO, M&M.
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Mahindra & Mahindra recorded its highest ever domestic sales volumes in the June quarter, in both automotive and farm equipment segments, with a record 75,400 sports utility vehicles (SUVs) and 1,12,300 tractors sold during the three months to June, raking in a revenue growth of 67% YoY to ₹19,613 crore. However, the company reported weaker than expected margins at 11.9%, primarily on account of a lagging impact of softening in commodity prices, which, according to the company, should reflect in the results for the ongoing quarter.
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