M&M Turns Around With Rs 8 Crore Q1 Net Profit

Mumbai, July 29: | Updated: Jul 30 2002, 05:30am hrs
Mahindra & Mahindra (M&M) has registered a net profit of Rs 7.79 crore for the June-ended first quarter 2002 as against a loss of Rs 29.61 crore for the corresponding period of the previous fiscal. The company has achieved the turnaround on the back of increased volumes of utility vehicles and tractors, cost re-engineering exercise and the benefits accruing from rightsizing and restructuring initiatives undertaken by the company.

M&M’s topline has seen an impressive growth of 21 per cent at Rs 828.43 crore for the quarter as against Rs 685.12 crore in the corresponding quarter last fiscal. However, the company’s other income component which is traditionally high saw a significant drop at Rs 3.05 crore as against Rs 14.40 crore in June quarter 2001. This has been mainly on account of the fact that some major dividends got declared before March 31, 2002, according to company officials. Dividend income constitutes a significant portion of the other income component for M&M.

M&M has achieved a 14 per cent growth in tractor sales during the quarter against an industry which saw a decline of 11.5 per cent. M&M sold 14,716 units as against 12,909 units in the same period last fiscal.

“The company undertook a correction of inventory during the last fiscal at the cost of wholesale billings being lower. The other players are doing it during the current quarter, while M&M has been able to convert retail sales into billing which explains its growth against the industry de-growth. The exports to US have also increased significantly,” said M&M vice president (finance) Uday Phadke.

The utility vehicle segment remained flat with the industry registering a 1.3 per cent growth during the quarter. However, riding on the back of recent introductions like Maxx, Royale and Bolero Camper, M&M has registered a 9 per cent growth at 13,241 units during the June quarter 2002. The company launched its ambitious sport-utility vehicle Scorpio in mid-June.

The demand for commercial vehicles in general during the quarter was robust with the market for LCVs with load carrying capacity of upto four million tonne increasing by 41 per cent. M&M saw a 73 per cent sales growth with 1,881 numbers during the period.

M&M, in its outlook for the current quarter, has said that while the outlook for the industry looks promising, the uncertainty in respect of the monsoon in different parts of the country may dampen the demand and influence the performance of the company.