Mahindra net up 9%

Tractor major posts Rs 1,000-cr net profit for quarter ended December

On the back of robust demand for tractors, Mahindra & Mahindra, the country’s biggest utility vehicle and tractor manufacturer, posted a nine per cent increase in net profit for the quarter ended December.

The Mumbai-based company, along with subsidiary Mahindra Vehicle Manufacturers (MVML), posted a Rs 1,000- crore net profit for the reporting quarter as against Rs 915 crore reported in the same quarter last year. The net profit was in line with analysts’ expectations.

While revenues from the farm equipment sector (FES), where M&M has 42 per cent share in the tractor market, grew 20 per cent over a year, automotive segment revenues came down sharply by 12 per cent.

Tractor demand for the whole of last year has been very robust, unlike the previous year when it remained subdued. With a better than expected monsoon, better minimum support price and government-backed incentives, it is expected the industry will close the year with a growth of around 20 per cent.

M&M closed the quarter with sales of 76,362 tractors, a growth of 22 per cent as against 62,522 tractors sold in the same quarter last year. The company’s share in the segment went up marginally by 0.5 per cent. FES contributed 39 per cent to total revenue as compared to 31.5 per cent in the same quarter a  year before.

“During the quarter, we passed on the material cost increase to the customer, which has allowed us to have better margins,” said Pawan Goenka, executive director and president (automotive and farm equipment sectors).

Ebitda (earnings before interest, taxes, depreciation and amortisation) was Rs 1,533 crore as compared to Rs 1,380 crore in the same period last year. On a standalone basis, the company posted growth of 12 per cent in net profit at Rs 934 crore as against Rs 836 crore in the same quarter last year.

Net income from operations fell to Rs 10,555 crore, a fall of two per cent for the quarter as compared to Rs 10,774 crore in the corresponding period last year.

Mahindra also said its market share was under strain due to intensifying competition in the sub-segment of utility vehicles where it is not present effectively. “The UV2, which is the compact, sub-four metre space, is growing and presently commands 60 per cent of the market. That is where we are not present,” said Goenka.

The company said it was in dialogue with the Tamil Nadu government to complete the process of a memorandum of undertaking and for taking possession of land on which it intends to build a new field facility. The plan, it said, was ready for the proposed plant and a test track.
“Capacity will be clearly deferred by a year or year and half because we have kind of lost a year in tems of capacity growth. We have not redone any calculations on capex as of now at the end of the year we will do the calculations and see if we need to recast the forecast for investment. So at the moment it remains the same at Rs 7500 crore but we will come back (with a revision) in May”, added Goenka.