M&M in slow lane; reports slight drop in Q2 net profit

Mahindra & Mahindra today reported muted growth as standalone net profit declined by 2.43 per cent to Rs 923.56 crore in the quarter ended September 30, but the homegrown auto major said it expects an economic recovery to boost demand for the rest of the fiscal year.
The company had posted a net profit of Rs 946.63 crore in the July-September period of 2014-15 fiscal.
The gross revenues and other income of the combined entity of M&M and Mahindra Vehicle Manufacturers (MVML) for July-September 2015 stood at Rs 10,206 crore, down from Rs 10,268 crore in the corresponding quarter of previous year.

"The monsoon did not pan out the way we had hoped this year. As things stand today, we do not see any opportunity for growth in the industry volumes. My best estimate is we will have a 5 per cent de-growth in the industry," M&M Executive Director Pawan Goenka told reporters here.
The combined entity sold 45,228 utility vehicles and continued its leadership position with a market share of 32.7 per cent. It also exported 10,230 vehicles, a growth of 45 per cent over the same period of the previous year.
The domestic tractor industry, with sales of 1,06,415 units, de-grew 24.8 per cent compared to the corresponding quarter of the previous year. The company sold 42,268 tractors in the domestic market in the quarter under review and maintained its leadership position with a market share of 39.5 per cent. It exported 3,170 tractors in the second quarter.

The poor monsoon has adversely impacted the farm incomes and rural sentiments, leading to a fourth straight quarter of de-growth for the tractor industry, Goenka said.

Late rains in September helped in improving soil moisture content and is expected to aid in rabi sowing. A good rabi crop will play an important role in boosting agri income and improving the rural demand, he said.
In the second quarter, the passenger vehicle market grew 6.3 per cent, with good growth in the car segment, while the UV segment continued to be under pressure and de-grew by 4.3 per cent.
In the commercial vehicle industry, the LCV segment remained in the negative but the MHCV goods space expanded on the back of improvement in industrial activity, movement in infrastructure projects and some replacement demand.

On the outlook, the company said, "With investment sentiment picking up and tail winds from falling interest rates likely to bolster urban consumption demand further, we expect growth to gather pace in the second half of the current fiscal.