Eicher posts net profit of Rs 237 cr in Q1; Royal Enfield CEO steps down

COO B Govindarajan will replace Vinod K Dasari with effect from August 18

Eicher Motors on Thursday posted a consolidated net profit of Rs 237 crore during the first quarter of 2021-22 (FY22), compared with a loss of Rs 55 crore during the same period in the preceding financial year (2020-21, or FY21).

The auto major's total revenue for the April-June period of FY22 was seen at Rs 1,974 crore, up 141 per cent, compared with Rs 818 crore in the corresponding quarter of FY21.

The company also announced a change in its senior leadership, with Vinod K Dasari stepping down as chief executive officer of Royal Enfield - a division of Eicher Motors - and executive director (ED) on the board of Eicher Motors, with effect from August 13. He will be replaced by B Govindarajan, who has been the chief operating officer at Royal Enfield since 2013.

Govindarajan will be inducted as whole-time director on the board and ED-Royal Enfield, with effect from August 18. 

Dasari is planning to dedicate his time to building affordable and accessible health care facilities. He had recently started a not-for-profit hospital in Chennai.

The rise in Eicher Motors' profit was largely due to an increase in sales. Royal Enfield sold 122,170 motorcycles in the quarter, an increase of 109 per cent, from 58,383 motorcycles sold over the same period last year.

The company's earnings before interest, tax, depreciation, and amortisation was Rs 363 crore, against Rs 4 crore in the same quarter of the previous financial year.

Siddhartha Lal, managing director of Eicher Motors, said, “The second wave did impact business. In India, our bookings saw an uptick in June, as local lockdowns and restrictions were gradually lifted across the country. The global shortage of semiconductors 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."

Lal added that the company will see an uptick in supply and production in the upcoming quarters and the demand situation seems promising. The company has also lined up a capital expenditure plan of around Rs 500 crore, similar to the previous financial year.

During the quarter, Royal Enfield expanded its presence in international markets and commenced operations in Singapore and the Netherlands with the launch of standalone flagship stores.

The company also announced the commencement of local assembly of motorcycles in Colombia, the third-biggest motorcycle market in Latin America, in partnership with its local distributor. This is the second assembly unit for Royal Enfield in international markets, after Argentina. To begin with, the plant will locally assemble the Royal Enfield Himalayan, starting this month.

"We registered our best-ever quarterly performance in international markets with a year-on-year increase of more than 400 per cent, on the back of strong performance in the Americas," said Dasari.

For the quarter, VE Commercial Vehicles (VECV), joint venture between Volvo Group and Eicher Motors, posted a net loss of Rs 72 crore, compared with a net loss of Rs 120 crore for the same period last year.

VECV’s revenue from operations was Rs 1,639 crore, up 156 per cent, from Rs 641 crore in the same period last year. VECV sold 5,806 trucks and buses in the quarter - a notable increase of 173 per cent, from 2,129 trucks and buses sold over the same period in the last financial year.