Mahindra Motors PRofit Out Come Rises

AJMER, India - May 30, 2013 - PRLog -- India's largest utility vehicle maker, Mahindra & Mahindra, posted better-than-expected net profit for the March ended quarter, backed by strong growth in the utility vehicle segment.

The Mumbai-headquartered company posted a net profit of Rs 963 crore for the fourth quarter of FY13, which includes Mahindra Vehicle Manufacturing (MVML), as against Rs 911 crore it posted for the same period last year. Revenues for the quarter grew 10% to Rs 11,342 crore and EBIDTA margins improved a whopping 240 basis points to 14.4% for the fourth quarter as M&M's vehicles enjoyed a good pricing power in the falling market.

The March quarter included profits made on sale of Mahindra HolidaysBSE 0.06 % share which yielded the company Rs 90 crore. Similarly, the company had gained in Q4 of FY12, by merging Mahindra Automobile Distributors Private Ltd (for Renault JV) to itself. If one excluded both these extraordinary income, the adjusted profit after tax for M&M (including MVML) was up 33% to Rs 872 crore versus Rs 654 crore of adjusted PAT of quarter four of FY12.

Bharat Doshi, executive director & Group CFO, Mahindra & Mahindra, said: "It was one of those years, where both segments (tractor and passenger vehicle business) faced pressure. Despite that, M&M has shown its resilience by posting good numbers. Looking forward, we expect a mild recovery in the economy. We expect interest rates to soften by 50 basis points in the next six months, the liquidity will improve and the currency to remain volatile. We expect the economy to grow by 5.7-6.7% in FY14."

For FY13, the revenues for M&M, including MVML, jumped 25% to Rs 43,655 crore. Net profit was up 21% to Rs 3,634 crore and the EBIDTA margins 13.9%, improving 60 basis points.

During FY13, the company's auto sector posted a strong double-digit growth of over 20%, whereas tractor sales were under pressure, it seems the roles have reversed in FY14. The tractor sales got off to a good start growing over 20% in April, but the utility vehicle sales grew by 5-6%, as the 3% excise duty increase in the budget hit the demand.

Pawan Goenka, president, automotive & farm equipment sector, M&M, said: "The UV segment, which got hit by the new excise duty definition, saw a fall of 14% in April and the ones which did not come under the new definition grew handsomely. So, that clearly shows that the excise duty has had an impact on the sales of the company."

Goenka said M&M, on its part, is working towards circumventing the new definition. The company will be launching Vibe compact car and three new variants during the year to bring in some excitement in the market. And on the tractor front, it has three new offerings, including all new tractor called MStar.
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