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M&M boosts Q3 profit 68% with one-time gain

M&M boosts Q3 profit 68% with one-time gain
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First Published: Thu, Jan 31 2008. 12 02 AM IST

Optimistic outlook: Pawan Goenka, president (automotive), M&M
Optimistic outlook: Pawan Goenka, president (automotive), M&M
Updated: Thu, Jan 31 2008. 12 02 AM IST
India’s largest tractor and utility vehicle maker, Mahindra and Mahindra Ltd (M&M), boosted its net profit by 67.64% for the third quarter after it booked a one-time gain because it folded a unit.
However, the company’s earnings without the gain were little changed in the period gone by because tractor sales slowed and an appreciation of the rupee against the dollar hurt earnings from exports. An appreciating rupee means that exporters get less when they convert the dollars in which they bill the goods to rupees when they bring back the earned income.
For the three months ended 31 December, the net profit was Rs405.15 crore, from 241.7 crore in the year ago, including the gain. Sales rose 14% to Rs2,940 crore, against Rs2,576 crore in the year-ago period. During the quarter, the company folded a wholly owned subsidiary Mahindra Holdings and Finance Ltd into itself, which resulted in a gain of Rs157.1 crore, accounted for as an exceptional item.
Optimistic outlook: Pawan Goenka, president (automotive), M&M
Interest rates at a five-year high has made credit for purchasing tractors dearer and that has been a major factor in pushing down the company’s tractor sales by 8.9%, at 24,266 units—higher than the industry’s fall of 2.4% in the December quarter.
M&M in its outlook said that while high commodity prices will impact prices and margins and high interest rates will dampen consumer demand, the company is “optimistic of meeting these challenges through innovative cost control, process efficiencies and designing products that exceed consumer expectations.” Analysts are also optimistic of future growth.
“The tractor segment should see consolidation .. since we expect a lot of support for the agriculture industry in this year’s Budget,” said S. Ramnath, vice-president, S.S. Kantilal Ishwarlal Securities Pvt. Ltd. “This would naturally have a positive impact for market leader Mahindra and Mahindra.” A new M&M sports utility vehicle (SUV), styled Ingenio, is slated to hit showrooms in the early next fiscal.
Shares of M&M closed at Rs691.05 on Wednesday on the Bombay Stock Exchange, down 1.51%.
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First Published: Thu, Jan 31 2008. 12 02 AM IST