Mumbai: Eicher Motors Ltd, whose net profit for January-March more-than-doubled on growing sales, is facing capacity constraints from suppliers, its chief executive Siddhartha Lal said on Thursday.
“There are some constraints we are facing from the supply side, we are talking to our suppliers to rectify that. We were held back a little due to the suppliers’ capacity,” Lal told Reuters over the telephone.
The firm, India’s third largest commercial vehicle maker, has earmarked Rs500 crore for capacity ramp-up on new products over three years.
It follows the calendar year as its fiscal.
It is currently functioning a little under its full capacity of 4,000 units a month, which Lal hopes to pump up to achieve full capacity this year.
Indian auto makers and their suppliers are trying to keep pace with a scorching growth in vehicle sales.
Sales of vehicles -- including cars, utility vehicles, trucks, buses, motorcycles and scooters -- jumped an annual 26.4% in 2009-10 to 12.3 million units, and are expected to reach a record high for the second year in a row in 2010-11.
Eicher, which has a joint venture with Sweden’s Volvo to sell trucks and buses in India, expects to maintain high growth rates throughout 2010.
“With the market remaining bouyant we will continue to show good growth in the coming months,” Lal, who is also the managing director, said.
Eicher Motors late on Wednesday reported a surge in quarterly profit to Rs402.1 million from Rs158.3 million and sales rose to Rs1,040 crore from Rs590 crore.
However, the firm is expecting to pass on increase in commodity prices to its customers to maintain current levels of margins and profitability, Lal said.
“Not just us but the entire industry will have to pass on the rise in commodity prices.”
Eicher Motors shares jumped 20% before easing to Rs779.35, still up 13.7% in a firm Mumbai market on its earnings, which were declared after market hours on Wednesday.