M&M hopeful of demand rebound as Covid-19 cases recede in Maharashtra

Decline in infections across the key auto buying state will revive sales; M&M to spend Rs 13,500 crore as capex and investments.

28 May 2021 | 3066 Views | By Shahkar Abidi

With Maharashtra witnessing a consistent dip in Covid-19 cases since the past few days, Mahindra & Mahindra (M&M) which has a significant operational presence in the State is certainly ecstatic.

According to Rajesh Jejurikar, Executive Director (Auto & Farm sectors) at M&M, while Q1 FY2022 has certainly been a washout, the situation is expected to witness a rebound between months of June-July, with some possible spill over in subsequent months. “Maharashtra is really coming back into action,” said Jejurikar during a post results virtual press conference, hoping the situation in other States to follow suit.

M&M has manufacturing units across auto hubs in Maharashtra located in Pune, Nashik, Mumbai and Nagpur for its automotive and farm equipment divisions. Since last month, all of M&M's plants have been working with lower manpower strength due to restrictions imposed by the State administration allowing manufacturing only for exports and essential services.

Maharashtra, with its Pimpri-Chinchwad , Chakan belt and Aurangabad belt houses major OEMs such as Bajaj Auto, Tata Motors, Mercedes-Benz, Volkswagen, Mahindra & Mahindra and several dozen auto suppliers. A large number of components such as cylinder heads, cylinder blocks, crankcase, piston rings, engine valves, electronic parts are primarily sourced from Maharashtra by several Indian and global companies.

Further, undeterred by the pandemic, M&M has even committed to spending over Rs 13,500 crore as capex and investments for next three years in its auto and farm equipment businesses. A break-up of capex suggests about Rs 9,000 crore to go into the automotive segment including electric vehicles (EVs), while Rs 3,000 crore has been earmarked for the farm sector. In terms of new investments, the auto and farm sectors will together see about Rs 1,500 crore of infusion, the company said.

The company added that as part of its cost-saving exercise, it has managed to save about Rs 900 crore in fixed costs in the past three years. Out of the total,  manufacturing, sales and marketing and general administration witnessed  expenses diving by 40, 70 and 30 percent respectively.

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