Mahindra & Mahindra (M&M) will continue to invest not only in capacity but also in R&D despite the difficult situation. Addressing shareholders at the company’s 67 annual General Meeting here on Tuesday, Anand Mahindra said “let me put a stake in the sand and clearly state that we are bullish about our future.”
“We are planning Rs. 10,000 crore of investment in the next three years, including a new auto plant. Our past experience suggests that this will pay dividends.”
Recalling that in 2008 when the economy was slowing down, M&M was among the few companies that had continued to invest, he said “we will invest with an even greater focus on the frugality and efficiency of that investment.”
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Mr. Mahindra said that the general economic environment appeared to be “one of gloom and there are many spectres looming over the economy. The spectre of galloping fuel costs, the spectre of the falling rupee, the spectre of inflation eroding growth and the spectre of a return to the Hindu rate of growth.”
He, however, said there was a glimmer of hope on the horizon, with the window of opportunity coming from the ‘bumper monsoon’.
“If agriculture does well, food inflation could come down, rural incomes could go up, and this could generate a revived demand for the goods and services that industry provides,” he said.
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Mr. Mahindra said it was important to use the ‘breathing space’ to put in place a structural approach to growth. “We need a frontal assault on all the bottlenecks .”
Admitting that the problem was deep rooted and did not have short-term solutions, he said, “at the risk of sounding over-optimistic, I believe that the very act of recognizing that our problem needs structural changes, and articulating a long-term agenda, will change the perception of India as a poor investment destination .”
Meanwhile, a strong showing from its tractor business and a rise in other income saw utility vehicle and automobile major Mahindra & Mahindra (M&M) report a 29.3 per cent rise in its net profit for the first quarter of 2013-14.
The company’s total income for the period at Rs. 10,888 crore, was up 7.6 per cent while operating profit rose 16 per cent to Rs. 1,287 crore.
The company attributed the growth in profits to “good volume performance by farm equipment sector and a tight control on expenses.”