Mahindra & Mahindra on Wednesday reported a 52.56% decline in consolidated profit after tax to ₹894.11 crore in the first quarter ended June 30, hit by lower vehicle sales.
The company had posted a consolidated profit after tax of ₹1,884.66 crore in the corresponding quarter of the previous financial year, Mahindra & Mahindra said in a regulatory filing.
Its total income during the June 2019 period stood at ₹26,289.48 crore as compared to ₹26,260.64 crore in the same quarter a year ago.
In the first quarter, M&M said its total vehicle sales stood at 1,23,690 units as against 1,30,484 units in the year-ago period, down 5%.
Tractor sales fell 15% to 82,013 units, compared to 96,527 units a year ago.
Exports of vehicles and tractors were at 10,923 units, against 12,730 units in the year-ago quarter, showing a drop of 14 per cent.
M&M said passenger vehicles demand continues to be impacted by the slowing down of the overall economy, which along with tight credit conditions and delayed monsoon has impacted consumer sentiment in both urban and rural India.
The stress in the agriculture sector and finance availability has impacted the demand for pick-up segment of light commercial vehicles, it added.
The heavy commercial goods vehicle segment has posted a de-growth of 32 per cent, the worst reduction in 23 quarters.
"The slowing down of economic activity coupled with the increase in freight capacity of existing fleet due to implementation of new axle loading norms has resulted in many transporters either reducing or temporarily suspending their fleet-purchase plans," the company added.
Tractor demand in the first quarter of 2019-20 remained sluggish and was adversely impacted due to a weak sentiment in the agriculture economy resulting from the delay in southwest monsoon, poor spatial distribution in June and weak agricultural incomes impacted by poor price realisation, it added.
On the outlook, the company said, "Domestically, data broadly paints a picture of subdued demand, notably in private consumption with firms and households continuing to hold back spending."
The lagged effect of interest rate cuts, liquidity infusion and targeted fiscal spending after the Budget, especially government actions on improving incomes for farmers, cash transfers and sops for affordable housing, could provide support to growth going forward, it added
"However, given the current challenging global and domestic growth environment, a concerted policy effort will be required to prop sentiment, put a floor under consumption and revive growth," M&M said.