The consolidated performance of the Mahindra & Mahindra (M&M) group showed a dip of 4.9 per cent in net profit in the quarter ended September, as the automotive segment, which contributes 60 per cent to the company's bottom line, suffered a forex loss of Rs 117 crore during the last quarter.
Net profit (consolidated) for the quarter ended September 30, 2008 stood at Rs 373.33 crore as against Rs 392.58 crore recorded for the same quarter a year ago. The company has 95 subsidiaries, four joint ventures and 11 associate companies.
M&M's standalone net profit was down 20 per cent to Rs 226.77 crore compared with Rs 285.94 crore posted in the corresponding quarter a year earlier.
Increased cost of raw materials, including auto grade steel, components and plastics, pulled down the company's margins as total expenditure grew by 22 per cent for the reporting quarter.
The Anand Mahindra-led also attributed the dip to an exchange loss of Rs 117.8 crore, which arose due to rupee's depreciation.
The loss also includes a notional loss of Rs 96.7 crore on account of the revaluation of the company’s net foreign currency borrowings, which is likely to reverse should the currency appreciate before the borrowings are due for repayment, said a company statement.
During the three-month period, passenger vehicles of Mahindra and Mahindra Renault (a 51:49 joint venture company) recorded a dip of 6 per cent in sales at 63,288 units (according to Siam reports) of Scorpio, Bolero and Logan vehicles among others.
"The runaway increase in raw material costs in a highly turbulent economic environment, which saw a precipitous fall in the value of Indian rupee and a steep climb in the interest rates, exerted considerable pressure on our operating margins and profits," the release further stated.
The company's farm equipment sector showed volume growth of 7.5 per cent to 73,208 units against 68,111 units. It sold 21,090 tractors in the quarter as against 20,633 units, a growth of 2.7 per cent. Revenue from its engine business grew by 101 per cent to Rs 226 crore against Rs 112 crore.
Standalone income from operations for the period grew 14 per cent at Rs 3,092 crore compared with Rs 2,704 crore y-o-y. Consolidated income grew 19 per cent to Rs 7,741 crore as against Rs 6,502 crore.
M&M has stated that it will focus cost controls, process efficiencies and product innovations to meet customer expectations.
The company's stock today closed 8.25 per cent higher at Rs 302.50 on the Bombay Stock Exchange.
