M & M Net Surges 22%, Sales Up 12%

In one of the best performances reported in the automobiles sector this year, tractors major Mahindra & Mahindra (M&M) yesterday announced a 21.64 per cent rise in net profit to Rs 112.44 crore for the first half of 1997-98.

The companys sales leapt 11.64 per cent over the corresponding period of the previous year to Rs 1,637.61 crore, while operating profit touched Rs 251.32 crore, an increase of 29.77 per cent. Operating margins increa-sed to 12.2 per cent from 10.8 per cent.

The companys per unit realisation dropped during the first half to Rs 2.19 lakh per vehicle from Rs 2.24 lakh per vehicle in the first half of last year, due to a drop in prices of all vehicles, including tractors.

M&Ms paid-up equity increa-sed to Rs 103.36 crore from Rs 101.79 crore due to conversion of 5 per cent convertible notes and zero interest bonds and 12.5 per cent debentures. Other income rose to Rs 56.99 crore.

M&M was helped by strong growth in the tractor division. While production rose 30.65 per cent to 35,100 units from 26,864 units, sales rose 20.09 per cent to 33,855 units. In contrast, sales of other vehicles rose just 1.52 per cent to 35,994 units.

The interest burden rose to Rs 58.31 crore from Rs 30.31 crore. Gross profit touched Rs 193.01 crore, against Rs 163.36 crore, while depreciation costs for the period were Rs 43.57 crore compared with Rs 25.43 crore. The company provided Rs 37 crore towards tax for the first six months of 1997-98, compared with Rs 45.50 crore last year.

We initiated a restructuring of our businesses in 1994 with a view to stay focused on areas of our core competencies, that is automotive and farm equipment products. The performance we are reporting for the first half of this year bears testimony to the fact that this focus has started yielding positive returns, managing director, Anand Mahindra, said.

The company has set up its own die-shop at Nashik. M&M has already acquired land near Thane to set up a R&D centre which is expected to be complete by 1999.