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Diversified automaker Mahindra & Mahindra posted on Wednesday a 78 per cent increase in profits for the quarter ending December 31, 2010. The profits were boosted by strong vehicle sales, exceptional income and various cost-saving initiatives.
Net sales in the quarter rose 36 per cent. The company sold a total of 56,211 utility vehicles in the period and maintained a market share of 62 per cent.
“The significant growth in the profit of the company, despite the relentless increase in material costs, is due to a good volume performance by both vehicles and tractors, tight control on expenses and prudent financial management resulting in lower interest costs,” said the company.
During the current quarter the company exercised the put option it had on its entire holdings in Owens Corning India, which resulted in an exceptional profit of Rs 117.5 crore, said the company. If this were excluded from the results, the company's net profit growth for the quarter would be 49.2 per cent (Rs 617.20 crore).
Higher exports
In the small four-wheeler load carriage segment, the Maxximo notched a market share of 21.6 per cent while sales in the three-wheeler and mini four-wheeler segment grew by 22.8 per cent. During the quarter, Mahindra exported 5,020 vehicles, which was 51 per cent higher than last year. “SAARC, South Africa & South America are some of the markets where the company's products sold very well,” the company said.
Tractors sales under the Mahindra & Swaraj brands grew 35.5 per cent to 55,649 units, while the company's market share in the quarter stood at 43.3 per cent. Tractor exports during the current quarter rose 10 per cent to 3,120 units.
Material costs a concern
On its outlook for the year, the company said that demand remains robust, but the recent hardening in the prices of commodities and oil causes a degree of concern. “The measures adopted by the Reserve Bank to combat inflation will necessarily result in tighter liquidity and further possibility of interest costs moving upwards,” it said.
The company is also banking on global expansion this year with a planned entry into the US market with pickup trucks and by completing the acquisition of Korean UV maker Ssangyong by April this year. The latter will give it access to more premium products for its portfolio.
Mahindra shares at the BSE rose 4.06 per cent to Rs 654.20 a piece on Wednesday.
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