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Our Bureau

Mumbai, Oct. 29 Notwithstanding the increase in sales, tractor and utility vehicle major Mahindra & Mahindra posted a 21 per cent drop in net profits at Rs 227 crore for the quarter ended September 30.

The lower profits are largely on account of foreign-exchange loss of Rs 117.8 crore, due to rupee depreciation.

“The exchange loss includes a notional loss of Rs 96.7 crore on account of the revaluation of the company’s net foreign currency borrowings, which is likely to reverse should rupee appreciate before the borrowings become due for repayment,” said a statement from the company.

The net profit also includes Rs 43-crore profit earned by Mahindra Holdings & Finance Ltd during February-March and the first quarter of the current fiscal following its amalgamation with the parent company.

The company said the refund it got from the Maharashtra local tax Octroi was reduced to Rs 27 crore against a refund of Rs 92.9 crore during the second quarter of 2007.

The net expenditure rose 22 per cent to Rs 3,206.78 crore, largely on account of the 24 per cent increase in raw material cost, at Rs 2,350 crore.

To ward off the impact that the global financial crisis was having on its growth prospects, the company said it would look to tighten costs and process efficiency, besides focussing on product innovation.

Volumes in multi-utility vehicle sales grew 8.9 per cent to 38,462 units while tractor volumes grew 2.7 per cent to 21,090.

Volumes in pick-ups and three-wheelers also showed increase.

M&M’s share price rose 23 per cent to Rs 305 from its previous close of Rs 248 on the BSE on Wednesday.

More Stories on : Financial Performance | HCV/LCV/Tractors | Forex | Mahindra & Mahindra Ltd

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