Eicher posts profit but chip shortage likely to hit Royal Enfield production

NEW DELHI:  Royal Enfield-maker Eicher Motors on Thursday reported a consolidated net profit of Rs 237.1 crore in Q1FY22 as against a net loss of Rs 55.2 crore in the year-ago quarter.  The company’s consolidated total revenue from operations surged 141% y-o-y to Rs 1,974.30 cr for the reported quarter.

“We continue to believe in our strong business fundamentals and are positive about the long-term prospects and performance of both Royal Enfield (RE) and Volvo Eicher,” said Managing Director of Eicher Siddhartha Lal. Lal, however, flagged semi-conductor shortage issue and said that this can impact the company’s production this financial year.

“The global shortage of semi-conductors continues to be a concern, and is likely to hamper production for the ongoing quarter, and possibly through the rest of the year as well,” he said. Vinod K Dasari, CEO, Royal Enfield, said, “Constraints on account of local and global supply chain disruptions continue to impact us, but we are working closely with our suppliers to quickly resolve them.”

Dasari also announced leaving the company on Thursday. He will be replaced by B Govindarajan, who is appointed as the Executive Director of Royal Enfield. Commercial vehicle maker Ashok Leyland which posted a net loss of Rs 282 crore in Q1FY22 on Thursday also highlighted semiconductor shortage.

The company said that the supply of Electronic Control Units (ECUs), continues to be a concern, owing to the limited availability of semiconductors. It added that the industry is also feeling the impact of high raw material prices. Two-wheeler-maker Hero MotoCorp witnessed a nearly 6 times jump in net profit at Rs 365.4 crore for the quarter ended June against Rs 61.3 crore profit  during a year-ago period.