Healthy volume growth, coupled with a better pricing strategy during the financial year 2010-11, helped Mahindra & Mahindra (M&M) reported a growth of 28% in its stand alone net profit to R2,662.10 crore for the year ended March 31 against R2,087.75 crore for the previous year.

The company’s stand alone net profit for the quarter ended March 31, however, grew just 6% to R607 crore as compared to R 570.26 crore, lagging behind estimates, and causing its shares to fall 5.34% to close at R664.60 on the BSE on Monday. Higher raw material prices in the second half of the financial year under review dented the company’s profitability.

The company’s operating profit margin for the quarter stood at 13.78%. ?The spurt in raw material prices in the second half of the financial year 2010-11 has impacted the margins. We could pass on some burden to the customers but not completely,? said Bharat Doshi, executive director and chief financial officer, Mahindra Group.

Adds Pawan Goenka, president?automotive and farm equipment sectors, M&M, ?We expect the raw material prices to head further north this financial year over last year.? He added that the impact of raw material prices over vehicles was 6-7% and 8-9% on the tractors. Total income of the company for the quarter ended March 31 stood at R6778.17 crore as compared to R5304.63 crore for the same period last year, a growth of 28%.

On a full-year basis, M&M’s operating profit margins fell to 14.7% from 15.89% over last year. Total income of the company for the full-year stood at R23493.72 crore against R18,602.11 crore, a growth of 26%. In 2010-11, M&M gathered strong market share of 61% in the utility vehicle (UV) segment.

Indicating that the last financial year was a challenging one, Anand Mahindra, vice-chairman and managing director, M&M, said, ?Last year has been what Chinese call the interesting times. Despite the challenges (high commodity prices), Mahindra has managed to close the year on a strong note, with growth witnessed across its brands. Frugal controls have helped us in the strong growth for the year. We are at over $ 12 billion group now from $ 7 billion a year ago.? On a group level, the consolidated net profit stood at R3,079.73 crore for the year-ended March 31 as compared to R2,478.56 crore for the same period last year.

M&M has earmarked a capex of R5,800 core for the next three years, including requirements by Mahindra Vehicle Manufacturers Limited. The company said it has also kept aside an investment of R2,000 crore in group companies for the next three years. The debt to equity ratio of the company on standalone basis stood at 0.23, while on consolidated basis it stood at 1.13 as on March 31, 2011. The company has a standalone debt of R 2,400 crore on its accounts.

Asked about funding the capex plan, Doshi said, ?As always, it will be a mix of internal accruals, borrowing, raising capital and divestment in group companies.? He said group companies in which M&M holds around 60-80% stake could be on radar for divestment.

During the year, the company will be launching eight new products including the new global SUV. The company also said it will be re-launching its motorcycle Stallio by end of this year. ?We are in the process of re-calibrating the motorcycle. We realised there was some tweaking needed on Stallio so that it fits the requirements of the customers in the market,? said Mahindra. The company said its other motorcycle ? Mojo is also in planned for launch this financial year.

On Ssangyong, M&M said that it has seen 50% growth in its volumes in the first quarter of this calender year. It sold little less than 40,000 units. ?We saw some impact on our Ssangyong volumes due to Japan crisis. We could have sold some 1,000 units more,? said Goenka.