Income from exceptional items (EI), mainly profit from investments of Mahindra & Mahindra Benefit Trust, pushed auto maker Mahindra & Mahindra Ltd.’s (M&M) FY20 first quarter net profit up by 80% to ₹2,260 crore for the period ended June 30, 2019.
Without the EI, the company, along, with its 100% subsidiary Mahindra Vehicles Manufacturers Ltd., reported 26% drop in net profit at ₹918 crore as compared to ₹1,238 crore in the same quarter last year, owing to lack of demand for automobiles and tractors.
During the period, sales revenue was 4% lower at ₹12,997 crore as compared to ₹13,551 crore in the same period last year.
On a standalone basis, M&M reported a lower net profit of ₹973 crore, as compared to ₹1,200 crore in the same period last year. However, including EI, the net profit was nearly double at ₹2,314 crore as compared to ₹1,221 crore in the same period last year. Revenue was lower at ₹13,242 crore as compared to ₹13,785 crore in the same period last year.
On a consolidated basis, the company’s net profit before EI was down 42.8% at ₹777 crore as compared to ₹1,358 crore in the same period last year on 1% decline in revenue at ₹26,289 crore.
The net profit after EI was down 46.5% at ₹914 crore as compared to ₹1,707 crore in the same period last year.
Commenting on the results, Pawan Goenka, managing director, M&M said, “Even though the auto industry is passing through a difficult time, M&M is reasonably well-positioned and having good prospects. We are fully prepared for the upturn in terms of products and capacity. We have no cash flow problem and not in any kind of desperate situation.” “Given the macro situation, we have managed reasonably well,” he added.
Job losses
However, he said without government’s intervention, the industry would not revive, leading to job losses.
During the quarter when the Indian auto industry de-grew 12.3%, with all segments of the industry reporting a decline, M&M sold 5% less vehicles at 1,23,690 units as compared to 1,30,484 units sold in the same period last year.
