Mahindra & Mahindra Ltd. (M&M) would invest ₹12,000 crore in the next three years to continue its growth momentum even as the company reported 17.5% rise in consolidated net profit in 2016-17 despite facing strong headwinds.
Out of this, while ₹7,500 crore would be invested in new product development and capacity expansion for Mahindra range of vehicles, ₹4,500 crore would go towards investments in group companies as well for acquisitions, VS Parthasarathy, Group CFO, M&M said.
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“Every year we will invest about ₹4000 crore and this includes ₹2500 crore for capex and ₹1500 crore for investments,” he said.
The company which is facing tough challenge in its utility vehicles and sports utility vehicles business from dozen player is focusing on to retain its market share with new products as well as to have a first mover advantage in the electric vehicles business.
It is also decided to build a strong portfolio in its farm equipment business through overseas acquisition and focusing on exports market. M&M is also working to set up a second home base outside India either in one of the ASEAN countries or in Africa.
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Invest will go towards all these, the company said. Dr Pawan Goenka, MD, M&M said the company would invest ₹600 crore to ₹800 crore in its electric vehicles business to ramp up production in line with the government’s push for electric vehicles in the country. “This excludes the investment to develop a high end electric vehicle through Pininfarina,” he said.
M&M on Tuesday reported consolidated net profit of ₹3,698 crore, up 17.5% for the year ended March 31, 2017. During the year consolidated gross revenue increased by 10.8% to ₹89713 crore.
For fiscal year 2016-17 M&M along with its subsidiary Mahindra Vehicles Manufacturers Ltd (MVML) reported profit after tax of ₹3,889 crore, up 16.3% on gross revenue and other income of ₹48,125 crore which was 9.5% more than the previous year.
On a standalone basis M&M reported profit after tax of ₹3,956 crore, up 23.4% on gross revenue and other income of ₹48,439 crore , up 8.9%.
For the fourth quarter ended March 31, 2017 M&M and MVML combine reported profit after tax of ₹874 crore, up 26.3% on gross revenue of ₹12,289 crore which was up 5.2% as compared to the same period last year.
The company vehicles sales in the domestic market on a year on year basis remained flat at 130778 units. However, tractor sales reported 13.3% growth in the domestic market at 46583 units.
The company said the ban on the sale of BS III from April 1, 2017 affected it adversely as it could not sale 13,000 BS III vehicles. The impact on this head has been estimated at ₹171 crore. In the current year the company will introduce a brand new SUV and two refreshed versions of existing models.
For the year the board recommended a dividend of ₹13 per share with a face value of ₹5.
Commenting on the results Deven Choksey, MD, KR Choksey Shares and Securities said, “Despite tough business environment, the company has reported good growth in profitability. The farm equipment division gave better profits. The results are on expected lines.”
M&M shares closed with a gain of 0.82% at Rs 1362 on the BSE.
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