Mahindra & Mahindra Ltd. (M&M), which declares its financial results along with its 100% subsidiary Mahindra Vehicles Manufacturers Ltd., reported a 26.5% drop in its standalone net profit to ₹1,213 crore for the second quarter ended September 30, 2019 compared with a net profit of ₹1,649 crore in the year-earlier period.
Revenue from operations dropped by 15% to ₹11,076 crore from ₹12,989 crore.
Total number of vehicles sold stood at 1,10,824 during the quarter against 1,41,163, down 21%. Tractor sales dropped by 6% to 68,359 units against 73,012 units. Exports slumped 21% to 10,540 units from 13,377 units.
Pawan Goenka, MD, M&M said, “Under the current circumstances, when the entire industry is affected, we have done well. During the quarter, we had a market share growth in every segment. Though the overall profit was down, we maintained the operating margin. Compared to the industry, we have done well in terms of market share, top-line and bottomline.”
For the quarter, the company reported consolidated revenue from operations of ₹23,936 crore compared with ₹25,431 crore, down 6%. Profit after tax was down to ₹368 crore compared with ₹1,709 crore, down 78%.
The company said the Indian economy continued to cope with suppressed consumer sentiment and a continuing liquidity crunch which, coupled with high consumer finance rates due to non-transmission of repo rate reduction, was impacting demand.
“The Indian auto industry, in particular, is undergoing a challenging period with all industry segments declining for two consecutive quarters for the first time in the last 15 years. Despite such a challenging environment leading to a volume drop in both its segments, the company, with strong emphasis on cost management, ensured the EBITDA drop was in line with the revenue decline,” it said.
Commenting on the results, Reliance Securities said, “Looking ahead, we expect M&M to face tough business situations in near term on account of turbulence in BS VI transition, competitive environment in domestic SUV space and slowdown in tractor industry.”
