M&M declines after announcing supply disruptions in automotive sector

Mahindra & Mahindra (M&M) slipped 1.11% to Rs 746.50 after the company said that the operations in the automotive sector will be affected by the global supply shortage of micro-processors (semiconductors).

M&M in a press release after market hours on Wednesday said that the global supply shortage of micro-processors (semiconductors) used in Electronic Control Unit (ECUs) is supplied by Bosch. This is estimated to result in reduction in production / sales volume of the company (automotive division) and Mahindra Vehicle Manufacturers, a wholly owned subsidiary of the company (MVML) in the last quarter of FY 2020-2021.

The company is engaging closely with Bosch and assessing likely production loss for the last quarter of FY 2020-2021 on account of this supply disruption as also steps to be taken to minimize the impact of the same. However, estimation of exact likely reduction in production / sales volume of the company (Automotive Division) and MVML for the last quarter is not ascertainable at this stage.

There will be no material impact of the above event on production / sales volume of the company (Automotive Division) and MVML for the month of December 2020. The company's tractor operations and 3-wheeler production is unaffected with the disruption.

In a separate announcement, M&M said it has subscribed to 1,050 equity shares of Sampo Rosenlew Oy, Finland, a subsidiary of the company (Sampo). Pursuant to the transaction, the voting rights of the company in Sampo would increase from 74.97% to upto 79.13%.

M&M's business is diversified across farm equipment, auto and automotive components, real estate, hospitality, information technology, defence and aerospace and financial services.

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