Q1 result includes numbers from Mahindra Holdings and Punjab Tractors.
Mahindra & Mahindra posted a first quarter net profit of Rs 400.9 crore, up 152% from Rs 159.3 crore in the same period of the previous fiscal, as the Xylo and its tractor models recorded strong sales.
Total income rose to Rs 4,266 crore against Rs 3,331.8 crore. The figures include results of Mahindra Holdings and Punjab Tractors, merged with the parent in Q1.
Operating margin widened to 14.35% from 7.75% last year, Bharat Doshi chief financial officer, M&M.
Raw material as a percentage of sales has come down to 66% in Q1 from 69% in the same period of the previous year, said Pawan Goenka, president (automotive), M&M.
The market leader in the utility vehicle (UV) segment recorded volume growth of 29% against the industry average of 1.6%. The firm claimed a market share 65% in Q1.
Exports are down 65% for automotive and close to 38% for the tractor segment, the company said.
Sales of the Xylo, launched in January, touched 7,800 units in June, Goenka said. The model has sold over 15,000 units since launch. The newer Scorpio and Bolero also reported good sales, he said, without divulging numbers.
“The utility vehicle market will, however, show single-digit growth and it will be difficult for us to maintain our leadership position as aggressive competition will come our way in the coming quarters,” Goenka said.
Goenka ruled out price cuts in the near future. “We passed on the benefit of reduced raw material cost and we have rationalised our prices. There will be no discounting on our products,” he said. A few months back, the company increased the price of Xylo by Rs 20,000 and reduced the price of Scorpio by Rs 80,000. The price tag of the Bolero was reduced by Rs 35,000. About 60% of M&M’s UV sales come from rural areas while the balance come from urban areas.
Good numbers also rolled in from the tractor business. Domestic sales rose 14% during the quarter to 42,130 units.
M&M said its takeover of Punjab Tractors helped it consolidate its position in the domestic tractor market and boost competitiveness.
M&M has a 43% market share in the tractor segment. M&M is also looking at 6-8 new African markets for tractor exports.
Anjani Kumat Choudhari, president (farm equipment sector), said, “The second quarter will be relatively decent than usual, and we are targeting a 6-10% growth. However, we will have to see how the monsoon recovers.”
M&M said there was no change in the capital expenditure plan for the period FY09-12. The company plans to spend Rs 4,500 crore, including on a four wheeler expected by March 2010 and a sports utility vehicle, expected some time in 2010. Uday Phadke, president, finance, said that the company has no fund raising plans for the next six months. Standalone debt of the company is Rs 3,300 crore.
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