Mahindra warns of profit impact due to production loss in September

Mahindra & Mahindra will lose one-fourth of production days in September to supply shortages of semiconductors which will lead to a commensurate drop in revenues and profitability, the company warned on September 2.

‘No Production Days’ of around seven days will be observed at M&M’s automotive division plants, which is estimated to result in a drop in production volumes by 20-25 percent in September.

The revenue and profitability will be impacted in line with the fall in production volumes. The company is taking various cost optimisation measures to limit the impact. As the situation is dynamic, the company is carefully reviewing the supply situation and all efforts are being made to minimise the impact, M&M said in a statement.

M&M is the third company to announce a production cut due to a shortage of semiconductors. Maruti Suzuki and Tata Motors had announced production moderation due to the same reason earlier this week. Maruti Suzuki said it will cut September production by 60 percent. Tata Motors said it will moderate production and offtake volumes in the coming months

“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. The company’s tractor operations, exports, trucks and buses business, and 3-wheeler production are unaffected by the disruption,” M&M added.

While the semiconductor shortage issue has impacted every automaker globally, M&M was the first company in India to declare production cuts because of the lack of chip availability. In December 2020, M&M warned of a loss in production due to a lower-than-expected chip supply from Bosch.