M&M stand-alone net profit down 6%

Weighed by a fall in the demand for utility vehicles (UV), Mumbai-based Mahindra & Mahindra posted six per cent dip in its stand-alone net profit to Rs 882 crore for the quarter ended June even as demand for passenger vehicles looked to pick pace again.

It beat street expectations which had pegged the net profit at Rs 833 crore for the quarter. During the quarter last year it had posted net profit of Rs 938 crore. The profit would have been higher, but for the Rs 67 crore (or 37 per cent) jump in the depreciation to Rs 248 crore. Stand-alone revenues were up two per cent year-on-year to Rs 10,096 crore in the quarter.

Pawan Goenka, executive director, Mahindra & Mahindra, said, "It had been a difficult quarter for the tractor and automobile sectors. Both had shown slight falls. However, commodity prices remained benign during the quarter and we did not participate in giving out incentives. We had also taken better cost-control measures".

The merger of the truck and bus businesses into M&M happened in the last quarter of the last financial year. The incremental numbers have been added to the reporting quarter. While Mahindra Racing UK and Competent Hotels became M&M's subsidiaries in the June quarter, Mahindra Holidays and Resorts USA Inc and Jiangxi Mahindra Yueda Tractor Company ceased to be its subsidiaries. So, the numbers are not comparable.

The company, however, provided comparable performance of M&M stand-alone, merged trucks business and its subsidiary, Mahindra Vehicle Manufacturers.

Comparable revenues increased to Rs 9,907 crore, a rise of one per cent compared to Rs 9,820 crore a year ago.

M&M reported eight per cent fall in the sales of automobiles in the quarter to 52,180 units. It has been facing headwinds due to competition. Its UV market share, 42 per cent in Q1FY14, declined to 40.5 per cent in the reporting quarter. The market share was 55 per cent in Q1FY12.

Tractor volumes grew 0.7 per cent to 72,166 units during the quarter against 71,696 units a year ago. Its market share in the segment improved to 42 per cent from 41 per cent a year ago.

The below-normal monsoon has impacted tractor sales. "The tractor sector is forecast to grow five per cent against eight per cent predicted due to the delayed monsoon. The passenger vehicle growth should be five to 10 per cent," added Goenka.

Comparable operating margins improved to 14.3 per cent during the quarter against 13.8 per cent a year ago. The net profit was up 4.2 per cent to Rs 896 crore.

The company has lined up a series of launches across all the segments. At least five new products including three passenger vehicles and two commercial vehicles are slated to be launched in the next 15 months. In addition, a new scooter, a high powered tractor called M Star will also be launched in the coming festive season.

Two directors Arun Nanda, non independent and Narayanan Vaghul independent have retired from the board of the company. Nanda however will retain the chairmanship of Mahindra Holidays, the time share company of the group.