Anand Mahindra, chairman of Mahindra & Mahindra whose flagship UV business has had a bumpy ride for some time now, today faced a barrage of questions from shareholders on falling profits and market share, but defended the business strategy saying in the long-term they will be winner.
The auto major today reported a steep 20 per cent fall in net profit to Rs 766 crore in the June quarter as sales were crimped by GST transition while revenue inched up 3.3 per cent to Rs 12,335.56 crore.
At the company's 71st AGM here, shareholders expressed concern about rising competition in the SUV segment where Mahindra used to be the leader till some years ago.
"I don't want to set market share goals and to claim that we are going to capture market pie. The number of entities which are coming into the SUV business and the number of products that are begun to be defined as SUVs has enlarged the market.
"But we will focus on growth, success of our products, increase in volume and increase in our profitability. We want to be winners in our segment which is our goal. Our products have longer life and I think we are going to win the race in the long-run," Mahindra told the shareholders.
Stating that the whole industry has been facing a downturn, he said, "Like almost everyone else, we too faced some hitches, mainly due to liquidity crunch which affected our partners and customers. But we were quick to recover and our sales have risen (since the note ban)."
The note-ban was followed by the Supreme Court's ban on sale of BS III models from April 1 which had a one-time material impact on the company, he said, adding the third big development was the rollout of GST, which in the long-term will benefit the M&M products due to lower tax burden.
Mahindra also allayed fears of the shareholders on the company exiting the European electric car market, saying it is only re-adjusting its strategy.
"We believe the European market has moved to a higher range, beyond the original demand that used to have for our small Reva offering. We will return to that market when we've a right product."
On struggling two-wheeler business, Mahindra said the focus is not on the volume segment but the premium one.
"We are coming out with some premium bikes and are reworking our strategy. You will see that happening soon. These are very high-end premium products which will be our focus," he said.
Earlier, talking to reporters about the steep 20 per cent fall in Q1 profit, M&M managing director Pawan Goenka said the June quarter was quite eventful, starting with BS III ban and followed by the GST transition. The industry, though, has managed these disruptions quite well, he said.
The GST rollout resulted in a one-time hit of Rs 144 crore by way of dealer support in respect of duty paid on goods lying with them, he said.
"We've taken full impact on the loss on account of GST. We've compensated our dealers for the pre-GST inventory. We've made an appeal to the GST Council not to let us lose this transition amount," Goenka told reporters.
Sounding bullish on sales front, he said the company will have new activities starting next month when it will roll out a new utility vehicle U321 and a few variants of the existing line-ups.
"Our focus is firmly on the UV, SCV and LCV segments. In SCVs, we've a market share of close to 52 per cent and expect it to further improve. In HCVs, we are on a growth path, especially after BS-IV. Yes, there is some struggle in the UV segment, where we have had de-growth in our market share. And that is where most of our focus will be," Goenka said.
On sales, he expects the PV segment to clip at 10-12 per cent and UV segment by 13-15 per cent, while SCVs may grow 8-9 percent. The M&HCV segment will mostly remain flat this year too and may pick up pace next year depending on the economic activity, he said.
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