Companies

M&M: Auto segment in top gear; but tractors lackadaisical

Updated on: Oct 25, 2012

A healthy 32 per cent growth in its utility vehicle sales when the rest of the auto industry is reeling under a slowdown has put Mahindra and Mahindra in a sweet spot in the September 2012 quarter.

During the quarter, the company’s auto segment revenues grew by 58 per cent to Rs 7,150 crore.

With the auto segment contributing to almost three-fourths of the total revenues, the company’s top line and bottom line (standalone) hence, witnessed strong growth of 33 per cent ( to Rs 9659 crore) and 22 per cent ( to Rs 902 crore), respectively.

The company managed to grow its operating profits by about 25 per cent. During the quarter, the company took a price increases of between 0.5-2.3 per cent in the auto segment.

However, the margins did witness some pressure. From about 12 per cent in the September 2011 quarter, operating margins have come down to 11.4 per cent.

While raw material pressures did ease, the fall could be attributed to the weak demand for tractors.

Tractor volumes dropped by 12 per cent year-on-year, thanks to the base effect and weak monsoons.

The company has a high market share in the greater than 40 HP segment tractors which has witnessed the maximum decline in this period.

In the coming months, while the strong performance of the automotive division is expected to continue, tractor sales could also witness a turn around.

M&M projects its tractor volumes to grow by up to two per cent in FY13, which translates into a growth of 5-9 per cent in the second half of the year.

The picking up of the monsoons towards the end of the season and higher price outlook for the kharif crops are likely to drive this demand.

Published on November 17, 2017

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

COMMENTS
This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you