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Utility vehicles major Mahindra & Mahindra on Friday reported a 3.3 per cent dip in stand-alone net profit at Rs 852.2 crore in the June quarter due to fall in overall sales and expects strain to continue in the tractor business in the current quarter as well.
The home-grown auto giant had posted a stand-alone net profit of Rs 881.8 crore in the April-June quarter of 2015-16.
"I don't see the farm equipment business picking up in the September quarter as well. Our tractor sales degrew 12 per cent in July and I expect sales degrowth to continue in the remaining months of September quarter. But with a better-than-expected monsoon, I see some pick up from October and hopes to close the year with around six per cent growth," executive director and head of automotive business Pawan Goenka said.
Net sales declined close to three per cent during the quarter to Rs 9,708.05 crore, he added. "We are confident that with the products we have in the pipeline, our power to spring back resiliently remains intact and you will see it being unleashed in the second half of this year," chairman Anand Mahindratold shareholders at the annual general meeting.
In the reporting quarter, Mahindra volumes fell 2.7 per cent while the sector grew seven per cent, while its tractor sales plunged 16.4 per cent against the sector's 16 per cent fall, pulling down realisation in the tractor segment by 13 per cent and those from the auto segment flat.
However, despite poor sales, the company could post the best margins at 14.3 per cent in past nine quarters, boosted largely by benign raw material prices coupled with cost cutting measures, said group chief financial officer G Parathasarathy.
During the period under review, Mahindra along with its wholly-owned manufacturing arm Mahindra Vehicle Manufacturers sold 49,354 vehicles, while tractor sales stood at 59,348 units in the domestic market.
But the tractor industry de-grew by 16.4 per cent in the quarter, and degrowth was led by M&M with a sale of only 59,348 tractors, pulling down its market share to 41.5 per cent from over 45 per cent a year ago.
Its total exports rose 29 per cent to 8,449 vehicles while tractors shipment rose 24 per cent to 3,208 units during the quarter.
