The Hindu Business Line : Mahindra PAT up 52 pc

Mr Bharat Doshi (left), Executive Director (Finance & Corporate Affairs), Mahindra & Mahindra Ltd, with Mr Prabal Banerji, Head of Treasury, announcing the company's results in Mumbai on Monday. - Shashi Ashiwal

Mumbai , Jan. 24

MAHINDRA & Mahindra Ltd (M&M) has reported a 52.34 per cent rise in profit after tax, for the quarter ended December 31, 2004, to Rs 133.18 crore from the previous corresponding Rs 87.42 crore.

Its net sales / income from operations was up 33.47 per cent to Rs 1,772.28 crore (Rs 1,327.82 crore for the year-ago period).

At a press briefing, Mr Bharat Doshi, Executive Director, M&M, said that the results were despite raw material price increase - M&M keeping fixed costs steady even as third quarter volumes gained by 18 per cent for utility vehicles and 28 per cent per cent for tractors.

It had also hiked the prices of its tractors in October and that of vehicles in December, to partly offset the cost impact.

"Going forward I am not ready to make a guess as the market with regard to input costs is still volatile," he said. While steel prices appear to be holding at present, long-term supply contracts continue to evade consumers.

According to him, the rural markets are robust. M&M's profit after exceptional items in farm equipments grew 80.66 per cent to Rs 74 crore for the quarter and by 150.69 per cent for the nine-month period. However, profit growth in automotives was restrained comparatively, by 15.43 per cent to Rs 104.86 crore and by 67.19 per cent to Rs 340.18 crore respectively.

This trend happening despite sizeable semi-urban and rural exposure in M&M's vehicle sales was attributed to the rural customer satisfying pent-up demand in tractors, higher price correction in tractors and the difference in price dynamic between the tractor and vehicle markets. End-use of the two products by the same rural market is also different.

For the nine-month period, M&M had a profit after tax of Rs 360 crore (Rs 202.90 crore) on net sales / income from operations of Rs 4,749.86 crore (Rs 3470.04 crore).

The implementation of VAT is theoretically capable of reducing prices provided the gains at each stage are passed on to the immediate consumer. But on the other hand, the initial phase of State-level VAT means full benefits may not visit large companies with manufacturing operations dependent on more than one State.

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