Mahindra and Mahindra consolidated net before exceptional items down 26 pct

The company said that its passenger vehicle (PV) segment saw the worst de-growth since Q3FY2001 during the quarter. Revenue and other income during the quarter decreased by 4% to `12,997 crore. PV demand continues to be impacted by the slowing down of the overall economy, which along with tight credit conditions and delayed monsoon has impacted consumer sentiment in both urban and rural India, M&M said.

The stress in the agri sector and finance availability has impacted the demand for LCV 2-3.5T (pick-up segment). The HCV goods segment has posted a de-growth of 32%, the worst reduction in 23 quarters. The slowing down of economic activity coupled with the increase in freight capacity of existing fleet due to implementation of new axle loading norms has resulted in many transporters either reducing or temporarily suspending their fleet purchase plans.

Tractor demand in Q1FY20 remained sluggish and was adversely impacted due to a weak sentiment in the agri economy resulting from the delay in the southwest monsoon, poor spatial distribution in June and weak agricultural incomes impacted by poor price realisation, the company said. In Q1FY20, the domestic tractor industry declined by 14.6% with sales of 1.91 lakh tractors. In this period, the company sold 82,013 units in the domestic market, with a market share of 42.9%.

Pawan Goenka, managing director, M&M, said that currently the industry is going through one of the biggest market slowdowns in recent times. “Liquidity, interest rate and tightening of norms by banks in financing, has led to consumers not being able to avail finance. Increase in registration fee, insurance tenure and road tax also had an adverse impact on the industry. All these factors together have weakened the consumer sentiment as they can’t justify the decision of buying a vehicle,” he said.

Goenka also announced that the company has four electric vehicles in its pipeline and by the end of this year, it will launch the electric KUV 300. “We have plans to expand our electric vehicle segment, but it has to be done in such a way that it doesn’t destroy the internal combustion market which is still a major part of our industry. We have to do it in such a way that both the segment can co-exist together,” he said.
M&M also indicated that the lagged effect of interest rate cuts, liquidity infusion and targeted fiscal spending post Budget, especially government actions on improving incomes for farmers, cash transfers and sops for affordable housing, could provide support to growth going forward.

“However, given the current challenging global and domestic growth environment, a concerted policy effort will be required to prop sentiment, put a floor under consumption and revive growth,” it said. Shares of M&M ended the day’s session 5.62% down at `518.45, on the Bombay Stock Exchange.