Eicher Motors Q4 PBT down 45.5% on absorbing share of Rs 14 cr loss in JV

Total income declines 11 per cent to Rs 2,351.30 crore

Eicher Motors Ltd has posted a 45.5 per cent decline in profit before tax, at Rs 446.84 crore during the quarter ended March 31, 2020, from Rs 819.59 crore during same period last year. This is after its share of the loss of its Joint Venture VE Commercial Vehicle Ltd, which was a loss of Rs 14.01 crore. The JV had made a a profit of Rs 75.47 crore in the year-ago quarter.

Total income of the company declined 11 per cent to Rs 2,351.30 crore during the quarter, as compared to Rs 2,642.78 crore during same period of previous year.

Royal Enfield's total revenue from operations during the financial year ended March 31, 2020, was down by seven per cent to Rs 9,154 crore from Rs 9,797 crore the previous year. EBITDA was Rs 2,180 crore, down 25 per cent from Rs 2,903 crore the previous year. Royal Enfield sold 697,582 motorcycles in the year, down by 15 per cent from 822,724 bikes sold in FY19. Motorcycle sales to international markets grew a significant 96 per cent year-on-year, at about 38,700 units.

Siddhartha Lal, managing director, Eicher Motors Ltd, said, “This has been a tough year overall for the industry, and the global pandemic during the last quarter brought with it unprecedented challenges and disruptive changes. At Eicher Motors, we have witnessed the impact of this situation, but have chosen to focus on the opportunities within these problems."

In the case of both, Royal Enfield and VECV, the Group has transitioned the entire product portfolio to the new BS-VI emission norms, and has also managed to sell its entire BS-IV inventory well ahead of the mandated time line. 

"Our BS-VI products have received great feedback from customers and we have planned a strong product line-up  going forward. We have built our businesses on solid fundamentals. We have a strong balance sheet and cash position, a robust business model with a very focused approach, and an exceptional management team at Royal Enfield and VECV. This has helped us tremendously in facing current challenges and gives us the confidence that we will emerge stronger from this crisis," added Lal.

The last quarter of this fiscal was particularly challenging in the wake of the unprecedented coronavirus pandemic. Royal Enfield’s manufacturing and retail operations were suspended between March 23 and May 5 as per Government directives. The company has since resumed operations, and more than 90 per cent of its retail network is now operational.

Vinod K Dasari, CEO, Royal Enfield, said, "We've had the best-ever export performance in international markets during the year, with a 96 per cent increase over last year. We have introduced new products and new initiatives to create better accessibility and build increased engagement." Over the past few months, its various digital campaigns have fuelled conversations and increased overall engagement by 50-80 per cent across different platforms.

It has added 100 new Studio Stores, taking the overall retail touchpoints to 1,521 across India, at 921 dealerships and 600 Studio Stores. In the international market, exclusive stores doubled from 42 in 18 countres to 77 in 21 countries during 2019-20.

VECV PAT declines 81%

For the quarter ended March 31. 2020, VECV’s revenue from operations was Rs 2,101 crore, down 35 per cent from Rs 3,209 crore in the same period last year; EBITDA was Rs 38 crore, down 86 per cent from  Rs 274 crore in the same quarter the previous year. Profit After Tax was Rs 26 crore as compared to Rs 139 crore during the same period last year. VECV sold 11,629 trucks and buses in the quarter, a decline of 45 per cent from 21,010 trucks and buses sold over the same period in the last financial year.

Vinod Aggarwal, MD and CEO VECV said “Commercial Vehicle industry reeled under pressure for most part of the last financial year with annual sales lower by 40 per cent and Q4 with 55 per cent respectively."

Restrictions have been lifted in a phased manner at VECV plants, its dealers and suppliers. Channel inventories were at an all-time low which helped the channel partners in managing their working capital better. Despite the annual industry market drop of 40 per cent, VECV declined by 33 per cent, and during this difficult time the silver lining was that our market share increased to 5.9 per cent in Heavy Duty and close to 30 per cent in Light and Medium Duty. It has launched its BS VI solution Eutech 6 in the market during the quarter and this helps the company to offer a comprehensive BS VI platform to the customers.

"While the current situation is definitely tough and industry will take time to get back on track, VECV has developed responses for various scenarios to emerge stronger in the future,” added Aggarwal.

The Group has performed a detailed assessment of its liquidity position and the recoverability of the assets as at the balance sheet date and has concluded that based on current indicators of future economic conditions, the carrying value of the assets will be recovered. Management believes that it has fully considered all the possible impact of known events in the preparation of the consolidated financial results. However, the impact assessment of Covid-19 is a continuing process, given the uncertainties associated with its nature and duration, it added.