India's Mahindra sees demand rebound but chip crunch, pandemic hurt

By Chandini Monnappa and Aditi Shah

BENGALURU (Reuters) -Indian automaker Mahindra and Mahindra said on Friday it expected a demand rebound as India emerges from lockdowns to curb a severe second wave of the COVID-19 pandemic, but the company would remain under pressure from a global chip shortage.

Despite the difficulties, Mahindra, which is also India's biggest tractor maker, reported a quarterly profit, compared with a loss last year when the first wave of the pandemic struck.

"We are ramping up production and we believe there will be a strong demand rebound as we get out of lockdowns between June-July," Executive Director Rajesh Jejurikar said.

The company, chaired by billionaire Anand Mahindra, reported a profit after tax of 484.4 million rupees ($6.69 million) for the quarter ended March.

Supply constraints, as chip shortages affect the industry globally, were an issue, but it was helped by strong demand in its auto and farm sectors and restructuring at some of its loss-making international units.

For the same period last year, it logged a loss of $345 million when it took a charge related to its South Korean unit SsangYong Motor Co. In the March quarter, too, it booked a one-time loss of $67 million on discontinuing SsangYong's operations.

Mahindra has been reviewing its business to retain only the most profitable parts, helping the company reduce the full year loss from international units to $325 million in fiscal year 2021 from $473 million a year ago.

It expects that loss to fall to $41 million at the end of the current fiscal year, and break even thereafter.

In a separate statement earlier in May, Mahindra said it expects auto sales, revenue and profit for the first quarter of the current fiscal year to be 15%-20% lower than the preceding quarter due to the pandemic and chip shortage.

Mahindra also said it is targeting capital expenditure of $1.66 billion over the next three years of which its will invest $828 million in its autos business and $414 million in electric vehicles (EVs).

The company plans to launch nine new vehicles by 2026, including EVs.

($1 = 72.4640 Indian rupees)

(Reporting by Chandini Monnappa in Bengaluru; Editing by Subhranshu Sahu and Barbara Lewis)