Supply chain disruption remains a major challenge in ramping up production, Pawan Goenka, managing director and chief executive at Mahindra and Mahindra Ltd (M&M), said on Friday.
“Demand continues to be robust on strong fundamentals. Our cash collections are good at the moment. We are looking to build inventory for the festive season, but supply constraints remain,” Goenka said while reviewing M&M’s June-quarter earnings.
M&M, which saw strong recovery in demand for tractors and utility vehicles that are sold largely in the rural and semi-urban markets, could not produce enough to match demand during June and July.
In July, the company reported that sporadic lockdowns in automobile hubs such as Aurangabad, Pune and Bengaluru have hit production.
“We are not able to ramp up the way we would have liked to,” said Rajesh Jejurikar, executive director, auto and farm sectors, M&M. While M&M’s tractor plants are operating at a capacity utilization of 90%, its automobile plants are at 50% utilization. The company management, in a presentation, said all vendors are operational.
M&M posted a 97% fall in profit to ₹68 crore in the June quarter, from ₹2,260 crore a year earlier. Revenue fell over 56% to ₹5,589 crore. The results include the financial performance of its unit Mahindra Vehicle Manufacturers Ltd.
M&M had a loss of ₹3,255 crore in the March quarter due to a one-time impairment.