M&M slips as chip shortage hits production

Mahindra & Mahindra (M&M) fell 0.86% to Rs 763.55 after the auto major announced that its automotive division will observe No Production Days for seven days in September due to semiconductor shortages.

M&M said its automotive division continues to face supply shortages of semiconductors, which has got further accentuated due to Covid lockdowns in some parts of the World.

Consequently, M&M will be observing 'No Production Days' of around seven days in its automotive division plants in September 2021, which is estimated to result in reduction in production volumes of the automotive division in September 2021 by 20-25%. The revenue and profitability will be impacted in line with the fall in production volumes. The company assuered that it is taking various cost optimisation measures to limit the impact. M&M further said it is carefully reviewing the supply situation and all efforts are being made to minimize the impact.

"There will be no material impact of the above event on the XUV7OO production ramp-up and launch plans. The date of commencement of Bookings will be announced soon," M&M said in a statement. The company's tractor operations, exports, trucks and buses business and 3-wheeler production are unaffected by the above disruption, it added.

M&M's business is diversified across farm equipment, auto and automotive components, real estate, hospitality, information technology, defence and aerospace and financial services. On a consolidated basis, M&M's net loss stood at Rs 331.74 crore in Q1 FY22 compared with a net profit of Rs 54.64 crore in Q1 FY21. Net sales jumped 60.2% to Rs 19,171.91 crore in Q1 FY22 as against Rs 11,969.04 crore in Q1 FY21.

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