Heavy uptick in dividend payments by subsidiaries, that contributed a whopping 55 per cent to the bottomline, lifted the consolidated net profit of Mahindra & Mahindra by 29 per cent to Rs 1,253 crore in the quarter to September, while net sales rose only 11.5 per cent.
Dividend income from M&M arms was a major contributor to the other income of Rs 688 crore posted in the second quarter ended September 30. Tech Mahindra alone contributed more than Rs 300 crore, including a special payout of Rs 150 crore.
Gross revenues and other income rose 18 per cent to Rs 12,049 crore as utility vehicle sales shot up 15.6 per cent and tractor sales expanded 36.9 per cent, the best in many years and much above the industry sales growth of 20 per cent, while exports increased 13.3 per cent, Group Chief Financial Officer V S Parathasarathy told reporters.
Pawan Goenka, who was today elevated as Group Managing Director, told reporters the September quarter was one of the best in recent years for the company and added he expects to close the year with a much better volume than the industry.
"We expect the auto industry to clip at 10-11 per cent while the tractor (sales), which grew 20 per cent in the first half, to maintain or even improve from that levels.
"At Mahindra, we don't offer a guidance but I am confident of bettering the industry numbers," Goenka said.
Asked about the impact of demonetisation of high value banknotes on rural sales, especially that of tractors and utility vehicles, he admitted the next few months will be tough for the company and also the industry.
"Yes, there will be pain this month and the next as most of the rural customers make down payments in cash only. But I hope things improve from January onwards," Goenka said while welcoming the demonetisation move, saying it is good in the long-term.
On GST, he said while the proposed 28 per cent is a tad above the present compounded rate of excise and VAT (for the auto industry), it is not that bad. But what will hurt the industry is the uncertainty on the cess front as final word is awaited, he added.
"However, if the Revenue Secretary is to be believed, there will not be any cess on sub-4 metre vehicles, which constitute the vast majority of the market. So I am optimistic. Moreover, with the inter-state barriers moving out, GST as a whole should be better for the auto industry," he said.
On a standalone basis, M&M net rose 27 per cent to Rs 1,163 crore from Rs 915.38 crore in the same period last fiscal, while revenue expanded to Rs 11,363.63 crore from Rs 9,834.41 crore in the year-ago quarter, up 15.56 per cent.
Unit volume sales during the quarter stood at 1,14,795, up 11.6 per cent. Utility vehicles sales were at 52,287 units, up 15.6 per cent from the year-ago period.
Domestic tractor sales during the second quarter stood
at 57,863 units, up 36.9 per cent from the same period last fiscal, the company said.
M&M said its total vehicle exports were higher by 13.3 per cent at 15,181 units, led by a good show in Sri Lanka, Nepal, Bangladesh and moderate performance in South Africa and Australia. But US sales plunged 37 per cent in the July- September period.
Shares of M&M closed at Rs 1,287 piece, down 2.70 per cent on BSE, whose benchmark Sensex plunged 700 points.
