During the quarter (Q4FY08), profit declined to Rs 221 crore from Rs 236 crore in the corresponding period of the previous year. The company expects the cost of inputs to rise by 12 per cent this year.
Net sales for Q4FY08 grew by 15.5 per cent to Rs 3,148 crore. The company saw a 44.48 per cent growth in sales of SUVs in April with 17,679 vehicles being sold. The company also increased its market share in the utility vehicle segment from 46.6 per cent to 51.5 per cent during the quarter.
"Volatility in steel prices and rise in the prices of crude is a concern for the industry," said Bharat Doshi, executive director (finance and corporate affairs), Mahindra & Mahindra. "We will have to monitor how the cost will change and what way it can be passed to consumers on a regular basis," he added.
For financial year 2007-08 (FY08), the company reported net profit of Rs 1,103 crore, a rise of 3.3 per cent over the corresponding period of the previous year. Net sales for the year grew by 14.7 per cent to Rs 11,503 crore. The operating margin of the company for the period dropped from 12.5 per cent to 11.6 per cent. The company expects further pressure on the margin this financial year.
"The concern for the company in the current financial year is the tractor business, where financiers are becoming more stringent," said Piyush Parag, analyst with Religare Securities. In the farm equipment segment, the company sold 90,509 tractors in 2007-08, a drop of 4.7 per cent as against the previous year. However, it maintained its market share of 29.9 per cent.
M&M's consolidated net profit rose 4.9 per cent to Rs 1,571.12 crore, including a one-time payment of Rs 440 crore by its subsidiary Tech Mahindra to a client. Consolidated net sales for the company grew by 35 per cent to Rs 23,774.79 crore as income from subsidiaries grew in the period.
"Subsidiaries contributed around 55 per cent to the total operating profit of the group up from 51 per cent in the previous year," said Uday Phadke, president (finance and legal affairs).
The company has earmarked a capital expenditure of Rs 2,000 crore for FY09, which it plans to fund through internal accruals.
"Most this amount will be invested for the Chakan Plant," said Doshi on the side lines of a conference.
The M&M stock fell by 0.46 per cent to Rs 641.60 on the day when the Sensex, the benchmark index of the Bombay Stock Exchange, rose by 1.53 per cent to 16525.37.
