Mahindra and Mahindra Limited F-12 Q1 PAT up 7.6% and Revenue up 28.8%

The Board of Directors of Mahindra and Mahindra Limited today approved the unaudited financial results for the quarter ended 30th June 2011 for the company. The Gross Revenues and Other Income of Mahindra & Mahindra Ltd. for the quarter ended 30th June 2011 is Rs.7294.3 crore as against Rs.5663.5 crore during the corresponding period last year – a growth of 28.8%. The net Profit before tax for the current quarter is Rs.814.3 crore as against Rs.721.1 crore in Q1 last year – a growth of 12.9%. In the current quarter, the non-cash charge arising from amortization of ESOPs granted in earlier years is Rs.26.5 crore as compared to Rs.0.9 crore in Q1 F2011. Excluding this charge, the PBT growth in the current quarter over Q1 last year is 16.5%. Profit after tax for the current quarter is Rs.604.9 crore as against Rs. 562.4 crore Q1 last year – a growth of 7.6%. The growth in the profit of the company despite the relentless increase in material costs is due to good volume performance by both Vehicles and tractors and tight control on expenses.

The company’s Auto sector volumes in Q1 F2012 registered an impressive growth of 20.9% in the highly competitive domestic market. In the Passenger Utility Vehicle (UV) segment, against an industry growth of 5.1% in the current quarter, the company sales at 44,407 vehicles grew by 14.3%. The company continued its dominant position in the market with a market share of 56.2%. In the Passenger MPV VAN segment, the company had launched GIO compact cab in Feb 2011 & Maxximo Mini VAN recently in April 2011. Both the products together, even so soon after their launch, recorded a volume of 4,073 nos. in the current quarter, with a market share of 7.1%. In a highly competitive LCV < 2T (mini truck) segment, company’s Maxximo Load & Gio Load vehicles sold 12,154 nos. – a strong growth of 53.7% over Q1 last year. In the current quarter, the company exported 5,717 vehicles as against 3,125 vehicles registering thereby a growth of 82.9% over Q1 last year. SAARC, South America & South African markets extended healthy support.

The domestic tractor industry sales grew in Q1 F2012 by 13.7% to 133,103 tractors against 117,099 tractors sold during Q1 last year. The company however out-performed the Industry by selling 57,500 tractors as compared with 47,916 tractors in Q1 last year – a growth of 20.0%. As a result, the company’s domestic market share in the quarter grew significantly to 43.0% as compared to 40.7% for Q1 F2011. In addition, the company exported 2,908 tractors compared to 2,376 tractors exported in Q1 last year – again a strong growth of 22.4%.

The Board meetings to approve the Q1 F2012 results of Tech Mahindra and Mahindra Satyam are being held later in the month. After the approval and announcement of these results, the company will separately release the information on Consolidated Group turnover and PAT.

During the current quarter, some of the major group companies like Mahindra Finance, Mahindra Forgings, Mahindra Holidays and Mahindra Lifespaces significantly improved their performance over Q1 previous year. The performance of Mahindra Finance with a 42% growth in consolidated revenues and a 32% increase in profits, and that of Mahindra Forgings with a 51% growth in consolidated revenue and a 241% profit growth (Q1 F2012 profit Rs. 18.2 crore, Q1 F2011 loss of Rs. 12.9 crore) were particularly noteworthy.

The global macro environment has deteriorated significantly in the last six months. The sharp rise in oil prices in the wake of political disturbances in the MENA region, the triple disasters that hit Japan in March, and the sovereign debt challenges facing Europe and the US, have cast a long shadow on growth prospects across the globe. In such a scenario, growth in emerging economies is witnessing moderation, as policy attention across the region has shifted from stimulating growth to containing inflation.  India is no exception, in this regard. With headline inflation ranging above 9 per cent for much of the past year, the RBI has tightened its policy stance aggressively in recent months leading to a sharp rise in loan rates with inevitable adverse impacts on domestic demand and industrial growth. However, as prospects for agricultural and services sector growth remain reasonably robust, our business outlook for the year remains positive but watchful.

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