The bulk of the financial gains that have accrued to the compamy has come in the last quarter of the year, where the operating margins have been unexpectedly higher than in the earlier periods in the year. The reason for this was both higher volume growth and some sucessful cost cutting. Unlike the other players in the commercial vehicles segment, M&M, raced aheadwith new launches and improved variants of earlier models.

Despite the various launches, the gross revenues could be increased by only 2 per cent. But analysts say that the real achievement by the company was the fact that utility vehicle sales fell by considerably less than those of its closest competitor, Telco. "Basically having a rural focus meant that M&M would suffer less as rural demand was buoyant," says Supratim Basu, automobile analyst with ASK Raymond James. Telco's utility vehicles sales suffered on account of having primarily an urban focus (for its Sumo model).

Analysts say that the company has done better than most of its rivals in both utility vehicles and tractors, (Punjab Tractors being an exception). In the utility vehicles segement it did better and increased its market shares on the back of strong rural demand. While in tractors it showed a growth of 2.3 per cent against a 1.8 per cent growth rate for the industry as a whole, while pushing up its market share to 27 per cent. Analystsattribute this showing to the fact that the company has consolidated its hold in its traditional markets and regions.

For the current year, the feeling among analysts is that the market for utility vehicles has bottomed out. In April M&M has already shown a 24 per cent growth in sales of its utility vehicles. "To some extent there have been indications that the volumes for the month of May in utility vehicles will be in line with the growth seen in April," says Basu. Automobile companies are begining to feel bullish on their growth prospects for the rest of the year.

M&M has indicated that there will be a growth of around 2-3 per cent in tractors in the current year and a growth rate of 10 per cent in utility vehicles. The latter expected growth rate can be considered to be very bullish, even in the light of April's growth rates, for the UV segement considering that last year was a complete disaster. But not all analysts are buying into the growth story in commercial vehicles right away and wouldobviously be seeking a few more months of secular growth. What is certain is that the first quarter numbers will be very attractive for the auto companies considering that there was growth in May as well.