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S. Muralidhar

THE Scorpio effect is still evident in Mahindra & Mahindra's (M&M) performance during 2003-04.

For a company that only has an eight per cent share of the domestic market for passenger vehicles, the performance of M&M's automotive division showcases the effect of dominating a sector, even though it may be a niche segment, can have on the bottomline.

During 2003-04, sales of M&M's automotive division, which contributes the lion's share (over 75 per cent) of total profits, grew in all the segments that the company offers products including passenger utility vehicles, pick-up trucks, light commercial vehicles (LCVs) and three-wheelers. But within this division again, it is the passenger utility vehicles (UVs) that have brought in the numbers.

Net sales revenue for the company and sales volumes of UVs during 2003-04 both grew by about 32.8 per cent. The larger share, here again, coming from the over 43 per cent increase in sales of the Scorpio alone. However, an increase in input costs, largely due to the sharp rise in cost of sheet metal, has partly dented the jump in volume sales. Raw material costs have gone up by over 36 per cent during 2003-04 over 2002-03. As a percentage of net sales, raw material costs during 2003-04 was at 68 per cent, up from 66.4 per cent during the previous year.

Interest cost savings of about Rs 35 crore and an increase in other income to the extent of about Rs 7 crore have directly added to the post-tax profits. M&M's income by way of dividends from subsidiaries and other dividends has fallen during the year under review. However, income from other sources has boosted other income by over Rs 7 crore. Staff cost has also gone up by over 9 per cent during the year compared with 2002-03. But, that was largely due to the impact of an ongoing VRS of the company.

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