Eicher Motors reports loss of Rs 55 crore for Q1 FY2021

Two-wheeler and commercial vehicle major, Eicher Motors has announced its audited consolidated financial results for the quarter ended June 30, 2020. For the quarter the company’s revenue from operations came at Rs 818 crore, (-66%) as compared to Rs 2,382 crore for the same period last year, loss of Rs 55 crore (-112%) as against profit of Rs 452 crore during the same period last year.

During the quarter Royal Enfield reported sales of 58,383, a decline of 68 percent compared to 181,966 motorcycles sold over the same period last year.

Commenting on Eicher Motors’ performance, Siddhartha Lal, MD, Eicher Motors said, “The previous quarter put forth unprecedented challenges for the industry and for Eicher Motors. However, we believe that the long-term potential for both Royal Enfield and VECV is very promising. Towards the end of the quarter we’ve witnessed encouraging consumer sentiment which was evident in our sales for the month of June. We believe that this trend will continue into this quarter as well. International business at Royal Enfield is doing extremely well, led by the modern 650 Twin motorcycles and the Himalayan. The Interceptor 650 has been the highest selling motorcycle in the middleweight segment in the UK for the last one year. At VECV, we have always remained focused on our long-term plans and have rolled out initiatives to improve efficiencies, productivity and further upgrade processes. We are very happy to announce that VECV has signed a definitive agreement with Volvo Group India for acquisition of its bus business under Volvo Buses India. This is a momentous occasion for us. We believe this integration will be instrumental in shaping the future of the Indian bus industry.”

Speaking on Royal Enfield’s performance, Vinod K Dasari, CEO, Royal Enfield said, “Through a challenging environment, we’ve remained focused on the opportunities for Royal Enfield. We’ve worked on strengthening our relationship with our customers and have ensured full support to our network partners. From a consumer point of view, our effort has been to build seamless and hassle-free processes and focus on retail and service excellence. We have launched several initiatives that offer contactless purchase and service experience for the consumer, including the Service on Wheels initiative launched recently. From a business point of view the initial consumer sentiment over the last two months has been very encouraging. Demand from semi-urban and rural towns have picked up well, and our network of studio stores across the country have been able to cater to this demand. There is pent up demand and we are optimistic about stronger recovery once supply chain stabilises.”

Royal Enfield’s manufacturing units resumed operations on May 6, 2020 after being suspended on March 23, 2020. Retail operations have also resumed through the unlock phases in a staggered manner. The company now has 921 dealerships and 638 studio stores open and functional across the country.

To enhance customer experience and ensure safety and convenience, Royal Enfield introduced several initiatives to offer contactless purchase and service. Through digital and online conveniences and At-your-doorstep services, the aim is to provide customers with a seamless and hassle-free discovery, purchase and ownership journey. Royal Enfield also launched Service on Wheels, a fleet of mobile, service-ready motorcycles, across the country for safe and hassle-free service experience at customers’ doorstep. The company has deployed 800 units of Service on Wheels motorcycles capable of undertaking upto 80 percent of all typical service and repair requirements have been deployed across dealerships.

VECV to acquire bus business of Volvo Group India
The other major highlight for the day for the Eicher Group was entering into a Business Transfer Agreement with Volvo Group India for acquisition of the bus business of Volvo Group (VGIPL) for a cash consideration of Rs 100.5 crore.

In terms of financial performance, VECV reported revenue of Rs 641 crore (-72%) compared to Rs 2,255 crore during the same period last year and a loss of Rs 120 crore (-415%) against profit of Rs 38 crore last year. The company sold 2,129 units registering 84 percent decline in sales, as against 13,331 units for the same period last year. However, the company says it outperformed the industry which saw a 91 percent drop in volumes. The company’s manufacturing facilities have resumed operations with the gradual easing of restrictions.

Speaking on performance Vinod Aggarwal, MD and CEO, VECV said “The last quarter has been challenging for the commercial vehicle industry with almost complete wash out in the first two months of the quarter on account of the pandemic. Since the economic activity was impacted, movement of goods and services was also severely impacted. As a result, the industry has witnessed one of the worst quarters with an overall volume decline of 91 percent. We expect the situation to gradually improve starting from the festive months led by infrastructure investments and strong pent up replacement demand. At VECV, we continued to work towards our vision of modernisation in commercial transportation by becoming the first in the industry to offer 100 percent connected vehicles to customers. This is a significant achievement and will drive both value and profitability.”

With successful migration to BS VI technology effective April 1, 2020, VECV says it has received an encouraging response from customers on Eicher’s new BSVI range – EUTECH6. The company claims it is the first company in the domestic CV industry to offer 100 percent connected vehicles to its customers.