Mahindra net surges 152% to Rs 400 cr

Mahindra & Mahindra, India’s biggest utility vehicle (UV) manufacturer, today posted an increase of 151.6 per cent in net profit for the first quarter, strongly aided by lower raw material prices and additional tractor numbers from Punjab Tractors (PTL), which it acquired two years ago.

Net profit for the period rose to Rs 400.85 crore as compared to Rs 159.3 crore in the same quarter a year earlier. While PTL was bought by M&M in 2007 it was only merged with the company last July.

In addition, strong demand and higher margins from the Xylo (multi-utility vehicle), which M&M had launched in January, also helped push overall margins. Absolute UV sales went up by 28 per cent to 48,720 units, as compared to 37,919 units in the domestic market during the quarter, marking a market share of 65 per cent as against 51 per cent.

Pawan Goenka, president (automotive sector), said: “The effect of various cost control measures during the quarter has reflected in the numbers. Cost of raw materials currently are as much as they were in the first quarter of last year. We do not expect a significant increase in demand for UV’s this year, which should be in single digits.”

Net sales of the company grew 26 per cent to Rs 4,675 crore as against Rs 3,704.6 crore in the corresponding quarter a year earlier. It recorded its highest quarterly sales at 42,130 units.

While sale of M&M branded tractors grew 8.3 per cent to 30,502 units (from 28,161 units), demand for Swaraj branded tractors (owned by PTL) grew by 32 per cent to 11,628 units (from 8,812 units) in the reporting quarter.

Due to the economic instability in many countries, says the company, its exports from India as well as its other international operations will continue to be under pressure. Mahindra makes tractors in the US and China.

Anjani Kumar Choudhari, president, farm equipment sector, M&M, said: “Our business in the US is down by 35 per cent, but we are expecting a growth in the range of 6-10 per cent in the domestic market for tractors, which should largely come from the festive season of September.”

The company, which will commence retail sales of its pick-up trucks in the US starting February next year has trimmed its capital outlay by 10 per cent to Rs 4,400-4,500 crore for the next three to four years. Commercial production of the US-bound vehicles will begin in December and sold through more than 300 dealers.

Further, it will launch a light commercial vehicle in the following quarter, followed by the launch of a medium and heavy duty commercial vehicle (MHCV) by January. The company will unveil its new branding and logo for the MHCV venture in December.

M&M has already appointed 32 dealers for the MHCV venture, which it shares with International Truck and Engine Corporation (ITEC). This number will be increased to 45 dealers by the end of the year. LCV’s will also be sold through these dealerships.