The Hindu Business Line : One-time gain of Rs 157 cr boosts Mahindra net 67%

Mumbai, Jan. 30 A one-time gain of Rs 157 crore has enabled Mahindra and Mahindra to report a 67 per cent increase in the third quarter net profit at Rs 405 crore against Rs 242 crore in the year-ago period.

Excluding this exceptional income — arising out of the merger of subsidiaries — the profit increased only three per cent to Rs 249.5 crore.

Total income rose 14 per cent to Rs 2,980 crore from Rs 2,617 crore. Despite higher sales, profit was lower mainly on account of higher expenses. Mr Uday Phadke, President Finance, Mahindra and Mahindra, said the company’s margins were under pressure on account of higher finance cost due to the recent large acquisitions, increased R&D expenses and a rise in staff cost.

Tractor demand slows

Despite a 16 per cent growth in auto sector volumes, the marginal rise in profit was because of a deceleration in tractor demand, adverse impact of rupee appreciation on export profitability, increase in finance costs due to recent large acquisitions, capital expenditure in investing in facilities, new products, and additional personnel to meet the future growth plans, said a statement from the company.

The company’s core business of utility vehicle sales showed higher growth while three-wheeler and tractor sales slumped. “Mahindra’s utility vehicle sales witnessed a growth of 18 per cent as compared to an industry growth of 8 per cent. The company sold 39,282 UVs in the third quarter of this financial year against 33,312 in the same period previous year. The company strengthened its leadership position in the domestic UV market with a market share of 52.8 per cent,” the statement said.

The company’s share in the ‘pick-up’ market grew to 77 per cent. “The utility vehicle segment is set to grow though the farm equipment sector may remain stagnant,” said Mr Phadke.

“While macro-economic signals remain strong, higher commodity prices will create pressure on pricing and margins. Customer demand will remain below potential until interest rate soften,” said the company statement.

The company’s share price was down by 1.51 per cent to close at Rs 691.05 on the Bombay Stock Exchange on Wednesday.

Related Stories:
M&M Q2 net dips 26%
Mahindra Q3 net up 3.9% at Rs 242 cr

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page