M&M Q3 net dips 93% on forex loss

Mahindra & Mahindra (M&M), India’s largest tractor and utility vehicle maker, recorded Rs 26.7 crore net profit for the quarter ending 31 December, a 93.3per cent decline from the profit in the corresponding period of the previous year as the sales of its vehicles declined. The Rs 182 crore foreign exchange loss in the quarter also tapered the profit of the company.

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“The after effects of runaway inflation of earlier months, paucity of retail finance, its high cost and lukewarm consumer sentiment in the wake of the global financial turbulence saw volumes decline,” said the company in a statement released on Saturday.

At 29,184 utility vehicles sold in the quarter sales of such vehicles declined by 25.7 percent over the corresponding period one year ago. Sale of the tractors in the same period declined by 14.7 per cent to 20,686 units.

The decline in company’s net profit came despite better performance of its subsidiaries such as Punjab Tractors, which recorded a 38 per cent growth in the profit, and Tech Mahindra that recorded a 12 per cent growth in the net profit. Mahindra and Mahindra have over ninety subsidiaries that contributed about half of the profit of the company in the last financial year.

The gross revenues and other income of the company in the quarter declined by 6.2 per cent to Rs.6354 crore.

“The slew of policy measures taken by the RBI in the recent months should soon loosen the liquidity crunch,” said the statement for the outlook of the company. The company also expects to benefit from cheaper oil prices, lower input cost and lower interest rate environment in the coming months.