Mahindra’s profit beats estimate

Mahindra’s profit beats estimate

Mumbai: India’s largest maker of sport utility vehicles and tractors, Mahindra and Mahindra Ltd (M&M), reported a better-than-estimated 89% surge in fourth-quarter profit, helped by accounting changes and the sale of a stake.

Net income in the three months ended March totalled Rs418 crore compared with Rs221 crore a year earlier, the Mumbai-based company said in a statement on Thursday. That surpassed the Rs198 crore median estimate in a Bloomberg survey of 10 analysts.

M&M wrote back Rs166 crore in the fourth quarter because the government changed accounting rules regarding foreign exchange provisions, chief financial officer Bharat Doshi told reporters. Excluding the one-time gains and write backs, profit would have been Rs279 crore, the Indian partner of Renault SA said.

The Indian government in March allowed companies to change provisions for mark-to-market losses, enabling them to spread the currency losses to either the tenure of the loan or up to 31 March 2011, M&M said. The change enables companies to write back provisions they had already made in accordance with earlier rules, the statement said.

Fourth-quarter net income includes Rs34 crore one-time gain from the sale of a stake in truck maker Swaraj Mazda Ltd and a pre-tax Rs17.9 crore government grant in the form of a tax refund, the statement said. Income from businesses other than manufacturing automobiles almost tripled to Rs61.43 crore.

M&M shares rose 1.7% to Rs637 at the close of trading in Mumbai on Thursday. The shares have almost doubled this year and are the second best performer in the benchmark Sensex index.