Companies

M&M standalone profit up 33% in Q3; note ban pulls down sales

OUR BUREAU Mumbai | Updated on January 12, 2018 Published on February 10, 2017

bl10_Pawan Goenka

mahindra

Pressure on volumes will remain in Q4, says Pawan Goenka

Mahindra & Mahindra reported 33.29 per cent increase in standalone profit after tax at ₹1,112.27 crore for the third quarter ended December 31, 2016, driven by an exceptional income of ₹363.78 crore on account of sale of investment in group firms. However, vehicle sales were badly hit due to demonetisation.

M&M sold 1,12,852 vehicles during the third quarter, down 8.3 per cent from last year. Utility vehicles sales stood at 51,772 units, down 11.7 per cent, while that of tractors stood at 72,363 units, up 20.8 per cent.

Total income from operations during the third quarter rose only 1.47 per cent to ₹ 11,777.98 crore, largely impacted by the demonetisation of currency notes.

“The pressure on volumes will remain in Q4, but not in all segments,” said Pawan Goenka, Managing Director.

Revenue from the automotive segment during the quarter stood at ₹7,453.08 crore, a decline of 7 per cent compared with ₹8,017.18 crore in the same quarter a year ago. Revenue from farm equipment was ₹4,322.14 crore, up 20.3 per cent in the third quarter, against ₹3,592.74 crore in the year-ago period.

M&M said an exceptional item of ₹363.78 crore for the quarter represents the net profit on sale of investment in subsidiary companies and a joint venture.

Mahindra said the festival season in October helped in boosting demand for tractor but overall third quarter saw some pressure on volumes due to demonetisation.

“India’s macro momentum suffered a dislocation in the form of withdrawal of high frequency notes by the government in November with discernible impact on consumption and investments. Demonetisation has had short-term costs but holds the potential for long-term benefits,” the company said in a statement.

Nasik project

In a separate statement, Mahindra announced its plans to invest ₹1,500 crore in Nasik Project for the next phase of expansion, which constitutes development and manufacture of its new MPV codenamed U321. The investment will cover expansion at Nasik and Igatpuri facilities.

“The project will create an additional combined capacity of 50,000 at both the plants and create over 800 jobs,” Goenka said.

The investment in the Nasik plant will be towards manufacture of vehicles, while investment in the Igatpuri plant will be for manufacture and supply of engines.

The company’s scrip closed at ₹1,278.05, down by 1.08 per cent, on the BSE on Friday.

Published on February 10, 2017
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