Eicher Motors registers first-ever net loss of ₹55 crore in at least a decade

BCCL
  • Royal Enfield maker Eicher Motors posted a net loss of ₹55 crores for the quarter ended June 30.
  • The revenue from operation declined 66% to ₹818 crore during the quarter.
  • This is the first time in at least a decade that the company has registered a loss in its quarterly earnings.
Royal Enfield maker Eicher Motors posted a net loss of ₹55 crores for the quarter ended June 30. The company had reported a net profit of ₹452 crore in the same period last year.

The revenue from operation declined 66% to ₹818 crore during the quarter under review.

Eicher Motors April-June 2020 (YoY)
Revenue-66%
Profit112%

This is the first time in at least a decade that the company has registered a loss in its quarterly earnings.
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“The last quarter has been challenging for the commercial vehicle industry with almost complete washout in the first two months of the quarter on account of the pandemic. Since the economic activity was impacted, the 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%,” said Vinod Aggarwal, MD, and CEO for the commercial vehicle segment.”

The shares of the company ended nearly 2% lower at ₹ 21,671, while the benchmark index Sensex closed flat.


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The coronavirus induced lockdown has taken a toll on automakers; the whole industry suffered a massive slowdown. And, Eicher business wasn’t immune to it either.

The company’s massive chunk of revenue comes from the commercial vehicle segment; the sales came crashing down due to the shortage of labour and the pessimism around public transport.

Eicher Motors SegmentQ1 FY20Growth %
VE Commercial Vehicles2100-84%

Its premium bike brand Royal Enfield also saw a massive decline of 69% in sales.
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Eicher Motors SegmentQ1 FY20Growth %
Royal Enfield57,300-69%

However, the company is quite positive about Royal Enfield's prospect.

“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 stabilizes,” said Vinod K. Dasari, CEO, Royal Enfield.

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The company also announced that its subsidiary VE Commercial Vehicles has entered into a business transfer agreement to acquire Volvo Group India's bus business for a cash consideration of ₹100.50 crore.

"Post the completion of the transaction, VECV and VBI will consolidate their bus businesses into a newly formed bus division within VECV. This division will offer Volvo and Eicher branded buses, and will maximise synergies to capitalise on market opportunities," Siddhartha Lal, Chairman, VECV said.

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