The Hindu Business Line : M&M clocks 110 pc growth in Q4 net

Mr Anand Mahindra (left), Vice-Chairman & Managing Director, Mahindra & Mahindra Ltd, and Mr A.K. Nanda, Executive Director, addressing a press conference in Mumbai on Monday. - Shashi Ashiwal

Mumbai , May 29

Mahindra & Mahindra Ltd (M&M) today reported 110.39 per cent growth in profit after tax for the quarter ended March 2006, to Rs 321.18 crore from Rs 152.66 crore in the previous corresponding period. Net sales/income from operations moved up 19.79 per cent to Rs 2,288.83 crore (Rs 1,910.68 crore).

For 2005-06, the company posted 67.18 per cent increase in profit after tax to Rs 857.10 crore (Rs 512.67 crore) on 23.45 per cent rise in net sales/income from operations to Rs 8,222.68 crore (Rs 6,660.55 crore).

The board has recommended dividend of Rs 10 per share or 75 per cent on the enhanced share capital, plus special dividend of 25 per cent.Speaking to newspersons, Mr Uday Phadke, President (Finance & Legal Affairs), attributed the performance to higher tractor volumes, ability to contain cost, negative interest cost, savings in tax (applicable tax rate dipped from 36.6 per cent to 33.66 per cent while M&M averaged 21 per cent due to factors including operations in States giving tax breaks), and focus on R&D.

Further, the company booked profit of Rs 146.53 crore (net of tax) on sale of shares at its subsidiary, Mahindra & Mahindra Financial Services Ltd (MMFSL), reflected under exceptional items for the quarter under review. At a consolidated level, several companies in the M&M fold returned good profits for the fiscal. Consolidated profit after tax was up 93.90 per cent at Rs 1,404 crore (Rs 724.07 crore) on 31.31 per cent increase in net sales/income from operations to Rs 12,335.36 crore (Rs 9,394.34 crore).

The company's scrip closed at Rs 591.50 on the BSE on Monday, against the previous close of Rs 592.35.

"We think the next year would be equally good. We usually say we are cautiously optimistic but I think it is time to strike out the cliché and say we are optimistic," said Mr Anand Mahindra, Vice-Chairman & Managing Director.

According to Mr Bharat Doshi, Executive Director, raw material cost - though high in the fourth quarter - was not substantially high for the full year.

"We are living in volatile times. But we are using our expertise to contain cost," he added.

Operating margin, which had improved from 8.36 per cent in 2003-03 to 11.57 per cent in 2004-05, marginally rose to 11.76 per cent in 2005-06.

Capital expenditure in the current fiscal would double to Rs 650-700 crore (Rs 300 crore), much of it for new products, IT, and R&D.

The company is developing a new utility vehicle platform called `Ingenio' for launch in 2008. "It is more of an MPV," said Dr Pawan Goenka, President (Auto Sector).

However, M&M's large three-wheelers, soft-top UVs, pick-ups, and LCVs, had to tackle bearish sales. Auto industry growth rate for the current year is estimated at 8-10 per cent.

Fundamentals continue to be strong for M&M's tractor business, said Mr Anjanikumar Choudhari, President (Farm Equipment Sector).

Long-term growth for the domestic industry has been forecast at 4-8 per cent; in the 2006-07 it should be around eight per cent.

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