M&M drops on recall of XUV500 for part replacement

Mahindra & Mahindra lost 0.49% to Rs 897.95 at 9:17 IST on BSE after the company on Friday, 8 March 2013, said it would carry out replacement of certain parts for a select batch of its XUV500 model.

The company made the announcement after trading hours on Friday, 8 March 2013.

Meanwhile, the S&P BSE Sensex was up 25.13 points or 0.13% at 19,708.36.

On BSE, 1,557 shares were traded in the counter as against average daily volume of 82,733 shares in the past one quarter.

The stock hit a high of Rs 902.35 and a low of Rs 892.50 so far during the day. The stock had hit record high of Rs 974.80 on 10 January 2013. The stock had hit a 52-week low of Rs 621.75 on 18 May 2012.

The stock had outperformed the market over the past one month till 8 March 2013, rising 2.22% compared with the Sensex's 1.02% gain. The scrip had, however, underperformed the market in past one quarter, sliding 3.68% as against Sensex's 1.33% rise.

The large-cap company has equity capital of Rs 306.99 crore. Face value per share is Rs 5.

Mahindra & Mahindra (M&M) said that the decision to replace certain parts for a select batch of its XUV500 model is in keeping with its customer centric approach as well as in compliance with the recently announced voluntary code on vehicle recall. The company said it will carry out preventive replacement of some parts in a select batch of XUV500s manufactured during 2011 and 2012. The replacement of three parts, including the fluid hose, front power window units as well as the left wiper blade cover, would be carried out with immediate effect, M&M added. This replacement would be free of cost for XUV500 customers who would be individually contacted by the company, M&M said.

The combined net profit of M&M and its 100% subsidiary -- Mahindra Vehicle Manufacturers (MVML) -- jumped 29.6% to Rs 915 crore on 27.5% growth in gross revenue plus other income to Rs 11522.30 crore in Q3 December 2012 over Q3 December 2011. MVML, located at Chakan near Pune in Maharashtra, has been set up as a 100% subsidiary of M&M with a view to source contemporary products for expanding the market offering of M&M.

M&M said that the growth in net profit despite the relentless increase in material costs was due to a good volume performance of the company's automotive sector and tight control on expenses. With regard to future business outlook, M&M said its current overall outlook on the Indian economy is one of cautious optimism.

The Mahindra Group operates in the key industries that drive economic growth, enjoying a leadership position in tractors, utility vehicles, information technology and vacation ownership. In addition, Mahindra enjoys a strong presence in the agribusiness, aerospace, components, consulting services, defence, energy, financial services, industrial equipment, logistics, real estate, retail, steel and two wheeler industries.

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